The Truth About Arbitration in Real Estate

If you ever made an offer on a property in California, you have read an Arbitration Clause. This clause only becomes a part of the contract if both buyer and seller agree to it, meaning they both initial the clause in the contract. And more than likely your agent told you to agree to it because “everyone does” or “it’s better than court” or for no reason at all. Well, agreeing to Arbitration may not be the right decision for you. Let me break it down for you.

Before You Get to Arbitration There’s Mediation

If a dispute arises in a real estate transaction over more than $10,000, buyers and sellers in California are required to go to mediation. Mediation is designed for both parties to find a compromise. You may find yourself in a situation where you don’t believe you should compromise. It doesn’t matter — you have to go to mediation. However, as long as you show up to mediation, you have met your contractual obligation. You aren’t required to come to a meeting of the minds. (If the value in question is less than $10,000, you would go to small claims court which is a lot cheaper and expedient.)

Next Step Arbitration

Assuming you have tried Mediation or you showed up for Mediation and promptly left, then your next step is Arbitration if you have agreed to it. Arbitration is voluntary but the decision is binding.

Advantages of Arbitration over Court

1. Your case will be heard faster.
2. The case will be resolved more quickly.
3. It will cost less.

Disadvantages of Arbitration

1. You don’t get a jury trial. If you go to court, your case will be heard by a jury of your peers.
2. There is no appeal process; the decision is binding.
3. Although it’s cheaper than court, you have to pay for it in a shorter amount of time while court & lawyer fees are spread out over
a longer period of time.

When I explain this to my clients, they typically don’t sign the Arbitration clauses. They understand that it’s still an option later on. But if a seller is dead set on it, then it can be agreed to in a counter offer. I will say that I’ve never had an client who’s an attorney that was willing to sign an Arbitration clause. And for that matter, the E&O insurance companies typically don’t want Brokers to sign these clauses in listing agreements, because they want to leave their options open.

It’s always a good idea to ask legal counsel if you are unsure of what to do.

The Truth About Appraisals

Let’s face it, appraisals are one of the scariest parts of a real estate transaction. It can cause a deal to implode very quickly. It’s one of the reasons why having an experienced listing agent on your side is crucial. An agent has to sell a home twice: first to the buyer then to the agent.

My Strategies to Help Overcome Challenging Appraisals:

Appraisal Appointment

I never let an appraiser go to a property unaccompanied. Many appraisers have supra keys; if they think a property is vacant, they will go on their own and then you’ve missed your only opportunity to make an impact on the appraisal. I always meet the appraiser. And I make sure I come armed with recent sales, detailed information about the subject property, and any market stats that may prove helpful.

Engage the Appraiser

It never hurts to engage the appraiser. I’ve often heard complaints that an appraiser wasn’t interested in what the agent had to say. I’ve never had that experience. And I always found that if you position yourself in a supporting role and on the appraiser’s team, they are typically receptive to what you have to say and appreciate the effort you’ve made.

Demonstrate Value

If there’s something special about the property, I make sure I highlight it. Showing value to the appraiser is crucial to their calculations. I have put together shiny marketing materials specifically targeting the appraiser in order to illustrate what makes the house unique and worth the price we have sold it at.

Support Your Price with Other Offers

If you had multiple offers on a property, show those offers to the appraiser to reinforce the sales price. Buyers ultimately set the price and if you have more than one buyer making similar offers, it’s only more proof that your sales price is justifiable.

 

Additional Tips for Appraisals

It’s also good to know the rules that the appraiser needs to adhere to. When doing appraisals, they can use comps as far back as one year. Lenders always want to see a comp at the asking price, a comp below the asking price, and one above the asking price. If you have a challenging property, you may want to consider getting an appraisal done prior to going on the market. It will help prepare you for what to expect and if the appraisal is strong, I share it with the appraiser in the transaction.

Housing Inventory Climbing in Redondo Beach

Over the past few months, we have seen an increase of homes on the market in Redondo Beach. Properties are sitting for a longer amount of time. There aren’t as many buyers clamoring over listings, creating bidding wars. And sellers are accepting offers that a year ago they wouldn’t have looked twice at, including contingent offers. All of these factors reflect the slow down that has been expected and seemed imminent, and quite frankly inevitable.

Increased Housing Inventory – What does It Mean?

There is definitely a change in the air. Buyers are having an attitude adjustment. They aren’t exhibiting the anxiety that was the driving force behind the real estate market these last five years. Now, they seem to be taking their time and are not rushing to make an offer on a property the minute they see it.

This all seems to indicate that we are on a “turn” in the market. We’re shifting from a seller’s market to supposedly a balanced market where neither buyer or seller has the upper hand. Last go round, we skipped the balanced market altogether. We went from the buyer’s market (2010 – 2012) right into a seller’s market. This time I think it will be a slower transition.

Rising interest rates will also contribute to this market slowdown. Buyers may take pause as they adjust to new rates. If the rates climb high enough, it should put downward pressure on pricing as well which should ultimately propel housing inventory even higher.

What does this mean for Buyers and Sellers?

As housing inventory increases and the market becomes more challenging for sellers, it is more crucial than ever that sellers properly prepare their homes for sale. Curb appeal and the emotional reaction from buyers is more important than ever if you don’t want your home to grow stale on the market collecting dust, not offers. Some staging may be necessary. Professional photos are more important than ever. A smart pricing strategy is important in any market, but again more than ever you want to be smart about your marketing strategy. On the other hand, buyers can finally take a deep breath and possibly take back some of the power. They could find themselves in the driver’s seat if properties start to languish on the market.

If this is a true balanced market, then there will be more negotiating and more concessions. Buyers won’t have to go above and beyond to get a deal done, but sellers will still get a fair price for their homes. I will continue to monitor the market and keep you apprised of any more changes in housing inventory and the health of the market.

Beach Cities Market Update October 2018

Here is a market update for the three Beach Cities, Redondo Beach, Manhattan Beach, and Hermosa Beach. The month of September had more inventory than any month in the past five years (excluding the summer months of 2016). September also had the lowest volume in sales as compared to any month in the past few years.

This slow down – of more properties sitting on the market and less properties being sold – can be explained by a few changes in the marketplace. First, buyers don’t have the same urgency to make a purchase. They have demonstrated more patience and are less likely to make an offer on a property that is less desirable. They are no longer submitting offers on every or any property they see. They are taking their time. Second, some sellers have priced their homes too high. With buyers coming to their senses, sellers can’t put outrageous price tags on properties any longer and expect them to sell immediately. Third, the market has been hit with properties that are less than desirable. These homes, that are impacted negatively by location or some other odd property feature, sit longer on the market as well.

What does this mean or buyers and sellers?

Buyers have an opportunity to get a good deal. They can afford to negotiate harder and demand more terms of a sellers. Case in point, more contingent offers are getting accepted. During the height of the market, a contingent offer was dead in the water. There were too many all cash or high down payment offers in play that a seller didn’t have to entertain a buyer who has to sell something first before they can buy.

Sellers need to make sure their homes are show-ready in order to garner as much money as possible for their properties. Buyers must have a strong emotional response to a property in order for them to make a strong offer. Sellers also should employ the proper pricing strategy or risk sitting on the market.

If you have any questions about this market update or need assistance buying or selling real estate, you can reach me at 310.428.8804

Amy Cimetta, Realtor, 20 Years in South Bay

A Local Realtor, A South Bay Resident: Get to Know Amy

June 27th marked 20 years since I moved to the South bay from the east coast. It should have marked 20 years and 1 day, however my original flight scheduled for June 26th was canceled due to bad weather, and I was forced to reclaim my 3 army-sized duffel bags and 4 oversized suitcases (clearly airlines didn’t charge for baggage back then), and spend the night with my parents so I could turn around and do it all over again in the morning. Not much for superstitions – I think not walking under a ladder is just plain old good sense – I chose not to recognize the bad-weather delay as a sign that I shouldn’t move to California. In retrospect, I think it may have been a sign that I shouldn’t have moved in with my boyfriend, but that’s a topic for a different blog. No, I forged ahead on my cross-country move with high hopes, my MBA, and a Thomas Guide (remember them?).

My transition to the beach life was smooth sailing. (Not literally – I don’t sail and I have an illogical fear of sharks.) But I was already an avid volleyball player and sun worshipper. (Now I can’t wear enough sunscreen.) I enjoy the small town vibe and running into friends wherever I go. I worked in the entertainment industry for years in sales & marketing positions. Then 12 years ago, I earned my real estate license just in time for the market to implode. (I’ve always had impeccable timing.)

Now, with 20 years under my belt as a South bay resident, and 12 of those years as a local Realtor, I hope to share some of my insights about our community and cover one of our favorite topics around here – real estate. We’re proud to live in our bubble with our beautiful beaches, hip downtown areas, highly ranked schools, and forever-on-vacation vibe. The past 20 years has seen a lot of change… some for the better, some for the worse. I will always mourn the closing of Rocky Cola, but I look forward to the opening of new restaurants, Serve on Second being one of the latest incarnations. Metlox greatly enhanced the downtown Manhattan Beach experience; I have mixed feelings about the pending beachfront development in Hermosa which will completely change the look and feel at the pier, but of course bring in more revenue for the city. I think homeowners should have the right to rent out their homes for any length of time, but I grapple with the fact that short term rentals have made our neighborhoods more transient. As a Realtor, I appreciate the re-development: tearing down older homes and building two or three in their place… we need the inventory! But as a resident, I’m not crazy about the additional congestion and traffic that comes with it. Yes, change is inevitable. Our goal should be to preserve the characteristics that make our Beach Cities special, but strive to make changes that enhance our daily lives, our environments, and our well-being… and let’s face it, increase property values! I look forward to addressing these type of issues – and real estate topics specifically – with you in the weeks and months to come.

 

1626 Prospect Ave: Spacious town home… it doesn’t get better than this.

Let’s face it… quite often town homes don’t have the best floor plans, they are usually tight on space, and you can’t ever seem to forget that you have neighbors. But in this week’s listing update, 1626 Prospect Ave in Hermosa Beach breaks the mold. Let me tell you why.

1626 Prospect Ave, Hermosa Beach: a town home like no other

1626 Prospect Ave living room with sectional sofa and additional seating leads out to balcony.

The upstairs living room is bright and airy and opens on to an outdoor living space.

Downstairs family room with fireplace and sectional sofa.

The downstairs family room at 1626 Prospect Ave provides another space to gather your friends and family.

Balcony off living room at 1626 Prospect Ave offers an additional entertaining space, furnished with wicker table and chairs.

One of the outdoor spaces that provide more room to kick back or entertain.

First of all, it’s a front unit town home that enjoys great curb appeal. Looking out the windows you see green space, trees, open air or the ocean. You don’t feel like your neighbor, Joe, sporting his ubiquitous V-neck undershirt, is on top of you. Second, the 2,500+ sq feet provides ample space with a living room, family room, breakfast area, formal dining room, and charming balcony.  The staircase is complemented with a gorgeous tree that reaches for the second story. It’s light & airy and spacious, giving it the feel of a single family residence. The floor plan is well laid out. The property looks in great condition, but there’s still the opportunity to upgrade if you so choose. Finally, the location is walking distance to a park and Hermosa View Elementary. It’s also near restaurants and shops.

 

 

1626 Prospect Ave is brokered By: Douglas Elliman of California

Redondo Beach: Hot Properties April 27, 2017

Today’s Brokers’ Open in Redondo Beach was loaded with new listings; it definitely feels like inventory is picking up! Outdoor spaces and some nice remodels caught my eye today. Make sure you check out these properties over the weekend. And if you have any questions, don’t hesitate to reach out to me. I’m always happy to coordinate showings and negotiate offers, if you need representation.

North Redondo Beach, Area 152

2312 Huntington Lane, #2, $999,000

Back patio with high end bar, patio table and chairs iwht umbrella, built in fountain.

Entertainer’s dream backyard in North Redondo

This detached, back unit townhome is on an unusual (almost) 9,000 sq foot lot. Typical lot size for a two-on-a lot is 7,500 sq. feet.  This extra land affords both units a lot of space. There are two guest spots: one between the units and one to the left of the rear unit. And the backyard is much deeper than the typical two-on-a-lot, hosting a bar, large patio table and chairs, and built-in waterfall. It’s an entertainer’s dream. Not to be overlooked, is the recently remodeled interior. There are Acacia hardwood floors, beautiful custom cabinets and marble countertops. I’ll be honest, I’m not a fan of marble in the kitchen because it stains easily, but it looks gorgeous. Upstairs is a family room and 4 bedrooms. This home is priced LOW at $999,000. I can guarantee that there will be multiple offers. It should go over $1.1 based on the upgrades and size of the lot and backyard. This is an unusual property and it should create high demand.

Another angle of the backyard at 2312 Huntington Lane, #2 in Redondo Beach where you can see the built in fountain and patio furniture.

2312 Huntington backyard 2

Image of the kitchen with custom cabinets of a deep rich wood and small island.

Kitchen at 2312 Huntington Lane, #2 with beautiful custom cabinetry.

2504 Huntington Lane, #B, $1,260,000

Just two blocks east, 2504 Huntington Lane is another townhome for sale. It’s a newer Mediterranean construction. It’s also a detached, rear unit. This 2003 built townhome also had a hefty makeover and shows very well. It has a light and airy feel, and there are many custom details like the stone on the fireplace and the chandelier in the stairwell. Priced in the right ballpark, this home should sell quickly.

1907 Belmont Lane, #A, $789,000

Bedroom with a large interior window that looks into the downstairs living space at 1907 Belmont Lane, #A in Redondo Beach

One of the charming features of 1907 Belmont Lane. The 2nd bedroom has a large window looking into the downstairs space.

This property was another surprise today. It offered a floorplan that I’ve never seen before in North Redondo. And in my opinion, different can be very good. The front entrance is toward the back of the house… not sure I’m sold on that, but it does offer some additional privacy. This townhome does not have the open concept that everyone seems to be looking for these days, but the design offers open, airy space. You can look down into the kitchen and living space from the stairway mid-landing and through the interior windows from one of the bedrooms upstairs., giving the home a lot of character. It’s a 3 bedroom that is currently being used as a 2 bedroom. It works well if 2 bedrooms is all you need because then you can enjoy the  charming formal dining room. But it can also be easily converted back to a downstairs 3rd bedroom… just need to install doors to the closet. There are a ton of outdoor spaces throughout this house and the side run is extra wide and extremely usable.

North Redondo Beach, Golden Hills, Area 154

Heading into the Golden Hills, there were 3 tall & skinny homes on Brokers’ today. These are all single families, and they earned the name tall & skinny from the typical narrow lot dimensions of 25′ x 100′.

1109 Stanford Ave, $1,049,000

This single family is in decent condition although it could use some updating. I like the fact that it has the additional half bathroom upstairs with the living space so the master bedroom doesn’t have to share a bathroom with guests. The backyard was my favorite feature. It has a zen-like patio with bamboo to create extra privacy.

1215 Stanford Ave, $1,295,000

Front patio with a couple of beach chairs firepit in this private front patio at 1215 Stanford in Redondo Beach

This secluded, charming front patio offers a great place to chill at 1215 Stanford in the Golden Hills of Redondo Beach

Front deck has a bistro table and chairs under an umbrella, offering another outdoor oasis in this Golden Hills single family in Redondo Beach

Front deck offers a cute place to sit and chat.

This single family is not the typical tall & skinny lot. The lot size is slightly bigger at 3,763 sq feet. The house is over 1,725 sq feet. It feels a lot bigger than what you expect when you walk up to it, doing a good job of fitting a lot of living space into this split level. This property also has great outdoor spaces that help extend the livability of the home. There’s a L-shaped backyard, a nice-sized front deck and a private front patio. You will want to spend a lot of time outside in these cozy spaces.

Photo of an outdoor table and chair under a large umbrella, creating another space to kick and entertain in this Golden Hills home in Redondo Beach.

Backyard has a deck and patio creating another place to kick back and entertain.

South Redondo

826 Knob Hill, $1,375,000

I made a stop in South Redondo today at 826 Knob Hill. This house is across the street from Alta Vista Elementary. It’s an older home that’s been nicely remodeled downstairs. There are three large entertaining areas on the first floor plus a bedroom. Upstairs are three more bedrooms. There is no true master bedroom, but you could easily convert the front living room or back family room into an awesome master suite and still have plenty of living space. And the small downstairs bedroom would be a perfect home office. Buyers are currently circling this property and there very well be offers submitted over the weekend. This home is next to the Southern California Edison substation that had stray voltage a few years back, but supposedly SCE fixed the problem. As a homebuyer, you want to investigate this however.

Have a great weekend and happy house hunting in the south bay!

 

Redondo Beach: Hot Properties for Sale 4/23/17

Here are some of my favorite properties for sale in Redondo Beach that hit the market in the past week (some a little longer). I selected each of these homes for reasons that I will explain below.

504 S Gertruda Ave, Redondo Beach. $1,999,999

This property has been on the market for 27 days now, but it’s worth a look if you haven’t seen it yet. I love this location in South Redondo because the incline allows for great ocean views. Also the streets in south Redondo are broad, creating lovely curb appeal, and a feeling of space that is hard to find in the beach cities.

On the front deck of the house, looking out at the view of the ocean from the first floor.

Ocean view from 1st floor

Looking at the spectacular ocean views from the 2nd floor master bedroom.

Unobstructed ocean view from the 2nd floor.

504 S Gertruda 1

Stairs from the back patio in this Redondo Beach single family lead to a large grassy backyard.

So here’s what I like about this property:The backyard is large and versatile. There is a patio area just off the kitchen which is perfect for entertaining. Then take a few steps up to the grassy yard, ideal for kids or pets. 1. The location: not only is it esthetically pleasing, but it’s not too far from the beach and not too far south to make your commute north absolutely miserable. 2. Views: You can enjoy the ocean views from the front deck and living room as well as the master bedroom and bathroom. The views on the first floor can be blocked, but the second floor views are spectacular and they are safe from obstruction. 3. Square footage: This is a large home with 2,845 sq. feet. All the rooms are spacious; the kitchen has a huge island and a pantry. 4. The backyard: Like I said, it’s been on the market for almost a month so it may be time to negotiate the price down!

2834 Pinckard Ave, Redondo Beach, $899,000

This home is on one of the best streets in the TRW tract of North Redondo Beach. It’s a small remodeled home with only 2 bedrooms, but the lot is 8,315 square feet, leaving room to grow. You can live in this home and add on down the road. What makes the home very livable is the outdoor living/entertaining space. It’s an awesome free standing covered patio with bar, built-in barbecue, refrigerator, heater and flat screen TVs. You will want to invite all your friends over every weekend! This home is priced at $899,000. The house is small, but the home will sell for more due to the size of the lot and backyard.

Redondo Beac home iwth outdoor patio with bar, barbecue, refrigerator, table and chairs and 3 flat screen TVs.

Entertainer’s Dream Outdoor Space in Redondo Beach

Second angle of the outdoor patio in Redondo Beach featuring stonework, granite counters.

Hang out in your high end outdoor patio with all the amenities.

Large backyard thanks to the 8,300+ sq foot lot in the TRW tract in Redondo Beach

Large backyard of this 8,300+ lot on Pinckard Avenue in Redondo Beach. There’s room to build a much larger home and still have a rockin’ backyard.

 

 

 

 

 

 

 

2303 Harriman Lane, #B, Redondo Beach, $1,049,000

The master bedroom in this North Redondo Beach townhome has a spacious alcove which is currently used as an office space.

The master bedroom in this North Redondo Beach townhome has a spacious alcove.

As usual a few townhomes in North Redondo Beach have it the market. My favorite this week is 2303 Harriman Lane, #B. It’s the back detached unit on a 2-on-a-lot. This home gets great light. It was built in 2000 but its appointments are still attractive and don’t feel too dated. I like the curved staircase. And my favorite features were in the master bedroom. There’s the tw0-way fireplace and a large, pretty alcove that is perfect for a home office, workout area or a sitting room. It’s well priced at $1,049,000. The current competition is higher priced and not as nice, in my opinion.

Things to Do: Brewery Art Walk in East Los Angeles 2017

At the Brewery Art Walk, my two girlfriends and I pose in front of a large graphic art of two sharks bearing the letters LA (for Los Angeles) on their chests.

My friends and I at a Sneak Preview of the Brewery Art Walk.

This weekend I enjoyed a rare opportunity for a private preview of the Brewery Art Walk in East LA. The Art Walk takes place at the historical Pabst Blue Ribbon Brewery which was zoned years ago as an Artists-in-Residence community. Artists rent live/work spaces in industrial buildings  that offer really cool lofts and other unique spaces that inspire creativity. We toured six different artists’ studios, meeting the artists, and listening to them speak about their art and their process. I even bought a small original piece from one of the artists we met on Saturday. Since she was selling it to me directly from her studio and didn’t have to give a cut to a gallery owner, she was willing to negotiate!

The art covers the spectrum from massive oil paintings that sell for $25,000, to illustrations, to printmaking that requires a precise layering of colors, to realism, to graphic artists that celebrate the city of Los Angeles. And that’s just what I had a chance to see. Other exhibits include sculpture, ceramics, photography, architecture, landscape, and more.

Brewery Art Walk 2017

Artist Jill Sykes discussing her work at the Brewery Art Walk.

Artist Jill Sykes discussing her work at the Brewery Art Walk.

The official Art Walk takes place on April 29 & 30 from 11 am – 6 pm. More than 100 artists-in-residence will open their spaces to the public. It’s a free event; even parking is free. And it’s a cool way to spend an afternoon absorbing culture, exploring new and favorite artists, and visiting a world that is starkly different from the Beach Cities or west side. Come spark your imagination with an up close and personal look at these artists’ work. Viewing their art in their homes and/or studios where they create is fascinating, and at times gives a deeper understanding of their artistry. The community itself: the buildings and the space has artistic value, and just touring the brewery and surrounding industrial buildings on this 16 acre campus is fascinating and worth the drive. And to worry, there’s a beer garden, and the on-site restaurant, Barbara’s At The Brewery, will be open for your culinary delight.

Real Estate Advice: Rent-Backs

A woman sits in a chair with her head in her hands. There are boxes all around her. She is exhausted and frustrated with moving. A rent-back agreement would give her more time to move.

Woman frustrated and exhausted with her move.

Just when you thought the stress of getting your home sold is over, there’s the next challenging hurdle of moving into your new place… if you even have one yet! A rent-back can be a helpful tool for a seller who needs more time to pack up a lifetime of belongings or still needs to find a new place to live. Some sellers need the proceeds from the sale before they can pay for and close on their upleg so there is a period of time between closes that they are essentially homeless.

As a buyer, including a rent-back in your initial offer may give you a leg-up on the competition. If the seller is going to need more time after the close of escrow, a rent-back can make your offer more attractive. Other buyers may not have the ability or willingness to offer a rent-back.

How a Rent-Back Works

Image of a lease which is part of a rent-back agreement

Rental Agreement

A rent-back agreement is a legally binding part of a purchase contract that does what it says: the buyer rents back the home to the seller for a specific period of time. The seller/tenant and buyer/landlord agree on how long the seller will stay in the property and how much the buyer will charge. Typically, the seller agrees to pay the buyers’ PITI which is their total monthly payment for their loan plus taxes and insurance. In this way, the buyer is not losing any money while the seller is still living in the property. But like everything in the contract, it’s negotiable. For instance, I just sold a home in which my client, the seller, got a 30 day rent-back for free. We had so many offers that several buyers were willing to offer the rent-back at no charge in order to sweeten the deal.

It’s best to negotiate all terms up front at the same time you’re negotiating the offer. Terms including deposit, utilities, renter’s insurance will be more easily agreed upon early on. But once the offer is fully executed, if the buyer did not stipulate a deposit, there’s very little chance the seller will agree to it later on.

Also, keep in mind the following: Lenders typically allow rent-backs for no more than 60 days. A rent-back for 29 days or less requires a simpler agreement than a rent back for 30 days or more. The buyer gets the keys at the close of escrow, but possession of the property is not delivered until the end of the rent-back. The buyer/landlord must give the seller/tenant 24 hour notice, per the agreement, for access to the property.

The Potential Negatives of a Rent-Back for Buyers and Sellers:

An image of boxes stacked up along with a plant, chair and some pillows. A rent-back gives a seller more time to move.

Household goods packed up for the big move to the new house.

For a seller who has lived in a home for a long time with a small mortgage, paying the buyer’s PITI can cause sticker shock, because it’s based on a higher value and subsequently a larger loan amount. Another possible downside for the seller is that you’re now living in someone else’s house! This can have emotional implications that are hard to imagine beforehand.

From the buyer’s perspective, you own a home, but someone else is living in it now! You have the responsibilities of a landlord. And there is the risk that the seller may not move out on the scheduled date.

When executed properly, a rent-back agreement can be a win-win for everyone involved. If you have more questions about rent-backs or are looking for a solution for your particular situation, feel free to call me at (310) 428-8804.