Over the years I’ve always had a picture of myself surfing on my business cards. Call me narcissistic, if you like, and maybe I am ( it’s my great hair). But it seems that I spend a lot of time at the beach. I even have a criteria that my office can be no less than four blocks from the shoreline. So it’s natural that I’ve helped a lot of surfers find homes in the North San Diego Coastal area. I do get teased sometimes for having a surfing picture on my business card but that’s ok, at least people remember it

It’s surprising how entrenched surfing is in the North County Coastal Area and the amazing popularity of living where the sun is almost always shining and there’s a cool breeze coming off the Pacific Ocean. The surfers that live and own homes in the area come from all walks of life and aren’t your typical stereo type party animal surfer dudes. They are Policemen, Firemen, Lawyers, Doctors, Teachers, Accountants, Business Owners and just about any other type of professional. They all have their surfboards ready and will be playing hookey from work the next time there’s a good south swell on a summer day.

Despite the turmoil taking place in the San Diego County Real Estate market beach neighborhoods have maintained higher values with every step closer to the sand. People from all over the world make this area their destination to visit and enjoy. And having a vacation home near the beach is very popular for the fortunate.

Not only do buyers consider the number of bathrooms in a home, they also consider the condition of the bathrooms.  To make yours show well:      

• Clean bathrooms from top to bottom.  They must be sparkling clean.
• Remove stains from sinks, tubs, and toilets.
• Polish faucets and repair any that are dripping or leaking.
• Unclog slow drains and make sure the sink pop-ups work properly.
• Repair and/or replace damaged or stained caulking.
• Remove water sports from shower doors and tub enclosures.
• All light bulbs should be the same wattage.
• Clear off the counter.  Only one or two items should be on the counter, such as a plant and nice soap dispenser.
• Hang up fresh towels.  If necessary, purchase new towels for showing the house.
• Pull back the shower curtain to expose the tub.  It makes the bathroom look bigger.
• And please, put the toilet lid down!!!

Not only do buyers consider the number of bathrooms in a home, they also consider the condition of the bathrooms.  To make yours show well:      

• Clean bathrooms from top to bottom.  They must be sparkling clean.
• Remove stains from sinks, tubs, and toilets.
• Polish faucets and repair any that are dripping or leaking.
• Unclog slow drains and make sure the sink pop-ups work properly.
• Repair and/or replace damaged or stained caulking.
• Remove water sports from shower doors and tub enclosures.
• All light bulbs should be the same wattage.
• Clear off the counter.  Only one or two items should be on the counter, such as a plant and nice soap dispenser.
• Hang up fresh towels.  If necessary, purchase new towels for showing the house.
• Pull back the shower curtain to expose the tub.  It makes the bathroom look bigger.
• And please, put the toilet lid down!!!

Buyers may need 5% more down payment to buy homes that are designated to be in a declining market.  By the way, the entire state of California (including real estate in Palos Verdes) is considered a “soft market” by Freddie Mac and Fannie Mae.  Kenneth R. Harney of the Washington Post wrote an excellent article on April 26, 2008, entitled “Declining Markets and Self-Fulfilling Prophecies(which was reprinted in the April 27th LA Times) which is a real “heads up” to buyers, sellers and realtors.

For the past couple of months, lenders have been telling me stories about borrowers who are pre-approved but during appraisal review on the purchased property, they are suddenly told by the bank that they must come up with an additional 5% down payment as the property is in a declining market.  The appraiser must actually check one of the three boxes on the form that is submitted to the lender - “declining market”, ”stable market” or “increasing market”.  The lenders consider any area with over 6 months supply of inventory to be in a ”declining market” which then triggers the bank to request an additional 5% down payment from the buyer in a purchase (or 5% less cash to borrower if a refinance).  This can be a very unhappy surprise to the buyer who does not have the extra money sitting in his account.

This is also an unpleasant surprise to the seller who has taken his property off the market while the buyer is in the inspection and loan contingency stage.  A wise seller will want to know if the buyer has some “backup cash” to cover this possibility.    Realtors representing both buyers and sellers need to be aware of this potential issue to help guide their clients to a smooth closing. 

Conventional loans with 20% down payment may no longer be the norm.  I am told that Wells Fargo has recently notified mortgage brokers that FHA loans will also have the same “distressed market conditions” requirements.

Torrance Unified’s Riviera Elementary was honored by its induction into the State’s exemplary rank of being A California Distinguished School for the school year 2007-2008!  California honors some of the state’s most exemplary and inspiring public schools. Schools selected for Distinguished School Awards are strong, well-rounded community schools. This year, the selection criteria for the Distinguished School program were more stringent than ever. 

9 South Bay schools were inducted into these ranks this year - they include:

Torrance Unified - Riviera Elementary, Arnold Elementary, Towers Elementary & Edison Elementary.

Redondo Beach Unified - Jefferson & Tulita Elementary Schools.

El Segundo Unified - Center Street & Richmond Elementary

Congratulations to our terrific South Bay Elementary Schools.  Note that the middle and high schools receive the awards on alternate years.   

Buyers who are looking solely at distressed properties may not be getting the “good deal” they are looking for.  So many people are constantly viewing sites that post homes in foreclosure or that are bank owned thinking that this is where they will find good deals.  Just because a property is a short sale, in foreclosure, or is bank owned does not mean it is a good investment.  Many short sales have their short-comings.  (Sorry, I couldn’t resist!)   

There is so much in the media everyday about foreclosures and short sales.  Banking on this and the human desire to get rich quick, “specialists” are offering subscriptions to websites and classes on “buying short sales and foreclosures”, “how to buy bank owned properties”, “how to find distressed properties”, and so on and so on.  I often wonder if anyone other than those putting on the classes is making much money.  It is kind of like appealing to the American desire to be thin instantly.  I’m sure you’ve seen the ads.  “You don’t have to diet or exercise.  Eat whatever you want.  Just drink this drink or take this pill and you will lose 30 pounds.”  And, I love the before and after pictures.  “Before” shows a guy with a huge beer belly and “after” shows a guy with abs of steel.  And, of course, all this occurred within 2 weeks!

But the truth of the matter is that if you want to be thin, you need to eat a healthy diet and exercise.  And, the truth of the matter in real estate is that you need to look at all factors, not just price.   I am not saying don’t buy a bank owned property or foreclosure.  I’m saying look at the whole picture. 

One very important thing to consider when buying a distressed property is how many in the neighborhood are also distressed sales.  When there are many distressed sales in a neighborhood, those distressed sales now become the comps.  So, if you are looking at a bank owned property that previously sold for $500,000 and you buy it for $400,000, you are now the comp.  It is unlikely you will be able to turn around and sell it tomorrow for $500,000.  What may appear to be a hot deal on the surface may not really be so great when you do the homework.

Again, I’m not saying stay away from distressed sales; just know what you are doing.  In many neighborhoods, especially lower priced entry level homes, just about all the listings are either short sales or bank owned.  If you want to live in a specific neighborhood and plan to stay there for a while, you are buying at a great time.  If your goal is to build wealth and your real estate portfolio, what a great time to do it.  There is no question the market will turn around and when it does you will be happy you bought now.

The approach I suggest to my buyer clients is to first determine how much you can and want to invest in your purchase.  Then look at properties that meet your criteria in that price range.  Keep in mind how long you intend to keep that property and what you plan to do with it (primary residence, rental property, vacation home, retirement home).   Look at location, condition, neighborhood, commute to work, etc. as well as price.  The house you decide on may or may not be a distressed sale, but you can feel confident that it is the right property for your needs. 

Rolling Hills Estates is the 3rd largest city on the Peninsula both in size (4.18 miles) and population (7,676) according the the Residence Handbook.  Their are 30 neighborhood areas within the community, each with its own special character.  Overall, the city has tried to maintain it’s rural residential atmosphere and many lots are 1/2 acre or more and many are zoned equestrian.  The city has 178 acres of parks (photo above of Highridge Park) , 25 miles of city equestrian trails,  10 miles of city bike paths, its own tennis club and stables.

Real estate prices in Rolling Hills Estates for single family residences currently range from $999,000 (for a 3 bedroom, 2 bath, 1,994 square feet home) to $2,475,000 (for a 4 bedroom, 4 bath, 3,286 square foot home) with 30 active listings.  The least expensive condo/townhome of the 19 active listings is $269,000 (for a 1 bedroom, 1 bath, 659 square foot condo).

Rolling Hills Estates is also the commercial center of the Peninsula with The Promenade (see my March 2, 2008 post), the BrickWalk, Peninsula Shopping Center (with a weekly Sunday Farmers’ Market - 2nd photo above).  The Norris Theatre stages many local community  and touring shows.  The main Palos Verdes Peninsula Library and Post Office can also be found in this commercial district.  The South Coast Botanic Gardens (see my March 13, 2008 post) is located on Crenshaw Blvd and is operated by Los Angeles County.  Rolling Hills Country Club and The Jack Kramer Club are both private clubs located in Rolling Hills Estates.

The City of Rolling Hills offers many special events, for example Mayor’s Breakfast Ride in May, the Tracy Austin Doubles Tournament in July, The Hills Are Alive 10K/5K Run in August, and the Peninsula Holiday Parade in December. 

This is a photo taken in July 1951 on Calle de Madrid - a street at the top of the Riviera (also considered the “Upper Hollywood Riviera.̶   It’s super cool - check out the cars!  The man who took the photo was amazed at how you used to be able to see views from so many places in the Riviera before all the trees grew up!  The trees in this photo are around 3 years old…as the homes in this photo were mostly built around 1948.  I am going to post a picture of this same spot as soon as the next clear day comes around so we can compare the views then vs. now.  Love the “woody” in the background! 

There are currently 27 single family homes on the market as of today with the average Days on Market at 61.    11 of those actively listed properties have reduced their prices at least once.  The highest price is $2,295,000 for a home in a gated planned community called Riviera Beach Colony - it’s a lovely home just steps to the beach.  The lowest priced home is $650,000 on Pacific Coast Highway - the service street. 

As far as what’s in escrow currently - there are 9 homes pending sale and their average days on market was also 61.  2 of those properties reduced their price once before going under contract.  The highest price pending home is $1,999,000 for a gorgeous new construction home with an ocean view on the corner of Calle Mayor and Via Pasqual.  It’s not quite done yet and never hit the MLS as active; it just came on as pending.  The lowest price pending property is $650,000 and it’s down on Highgrove and needed some work. 

As far as what’s sold this year - 2008 - we’ve got 16 sales so far.  It’s a far cry from this time last year (2007 had 28 homes sold by now) as far as number of units sold.  This year is off by 43% for number of units sold. A lot of people are clearly “waiting it out.”  We do have the same number of actively listed homes though - but many of those have been on the market a long time….a couple for over a year!  The only good news here for 2008 so far is that the average price is actually up 8% with the average price for 2008 sales coming in at $1,228K and average price from 2007 sales (same period January 1st - April 22nd) coming in at $1,129K.   The most expensive home sold in 2008 so far was $2,425,000 and it was gorgeous with the most amazing views!!  It is one of the most expensive homes ever sold here in the Riviera, short of the homes on the Paseo de la Playa bluffs.  The least expensive home sold in 2008 was $605,000 on that same PCH service street as mentioned above. 

One area to look at as well when mentioning the Hollywood Riviera is the difference in the Torrance side (90505) and the Redondo Beach side (90277.)   See my article - “Hollywood Riviera - Where is that Anyway” for a map of the different sides.  The Torrance side’s solds in 2008 average price was $958,00 (6 units) and the Redondo Beach side’s average price was $1,390,000 (10 units.)  Big Difference here!

Stay tuned for next months update!

With the current buyer’s market and the amount of available inventory, sellers need to do what they can to set themselves apart from their competition.  One way to do that is to have a pre-listing home inspection. 

It is always recommended that a buyer get a home inspection during the contingency period of the contract.  The purpose of this is to make the buyer aware of any problems or defects in the house.  It is like asking your mechanic to check out a car you are thinking of buying. 

However, it can be very beneficial to the seller to get an inspection before putting the house on the market.  For one, sellers are usually aware of the condition of their house, but a pre-listing inspection documents it.  After the inspection, the seller may decide to do some of the repairs so it is in better condition when it goes on the market.  Or, rather than doing the repairs, the seller can disclose the defects to potential buyers.  Disclosing this before an offer is made reduces the possibility of the buyer trying to renegotiate the price after the buyer’s home inspection.

Secondly, if there is a problem the seller is not aware of, the seller will find out up front rather than after an offer has been accepted and escrow opened.  At this point the seller can decide whether to make the repair or reflect the condition in the asking price.  If the problem is not discovered before the house is listed, it will be discovered when the buyers do their inspection during the contingency period.  So it is better to find out sooner than later.  It is really hard on sellers to think they have their house sold only to have the deal fall through after the buyer’s inspection. 

When you have a pre-listing inspection, your agent can advertise that it has been done and also provide interested buyers with a copy before they make an offer.  Buyers should still get their own inspection of the home, but it is less likely that a condition will be found that is a deal breaker.  Yes, the seller has to pay for the pre-listing inspection, usually around $250 to $500 depending on the size of the house.  But, this is money well spent.  It could very well help to sell your home more quickly and maybe even for more money.

So, do something your competition doesn’t want to bother with and set yourself and your home apart from all the rest!