Do You Know What IEA and IVA is in Real Estate?
Like the weather this weekend, overcast with a little sun, typified the market. Open house traffic slowed from previous weeks, but could have been affected by the reporting period’s warm weather and graduations. The buyers that were out there are eager to find the right home.
Multiple offers also slowed, dropping to 15% of total transactions. The majority taking place in San Francisco and the Berkeley/Montclair/Piedmont markets. Ninety percent of the multiples sold for over full listing price. One SF Noe Valley 4bedr./3ba. property listed at $1.398 mil. received 10 offers and went well over asking. Curiously, in our Montclair office, 4 homes with single offers all sold over asking. Perhaps indicating that buyers wanted to secure the properties before more offers were submitted and saving dollars by not getting into a bidding war.
The homes that are receiving the most attention are those that have IEA and IVA.
IEA is “immediate emotional appeal” and IVA is “immediate value appeal”. A home that has both will end up in the 15% of the transactions I reviewed above. If a home has neither the chance of selling is zero.
What I mean by IEA is that when you enter a newly listed home you are overcome with the feeling that I could live here—just move in and set up for the house warming party. On Broker’s tour last week I saw two homes in the $1.1-1.6 mil price range. Both homes were attractive from the street, but once you entered they were profoundly different. The first one you entered and right away were hit with canine odors. The house had many traditional features, but all you could focus on is the smell. The rooms were ok, but felt ordinary as the beddings were rather sparse and unattractive. The upper deck had weathered paint and plants that looked as weathered as the deck. Inviting backyard, but the landscaping unimpressive. Nice spacious home, but didn’t sparkle.
The second home you entered and you were greeted with that wonderful smell of fresh paint. It has that clean as whistle feeling. It was professionally staged. The landscaping in the backyard was impeccable. The listing agent asked me if I had seen the listing previously. I had not. She shared that the seller invested over $30,000 in creating what I call IEA. Oh by the way, the house had just received an offer. Before the investment no offer. Sellers must make the investment. It will bring them a significant return and most importantly a sale.
In today’s market you need IEA or IVA, but preferably both. You need IVA which is as important, as buyers know the values. They have done their homework.
Sales activity remained at the elevated levels of the last report. Meaning that they were at levels that we had not seen last July. Instead of doom and gloom newspaper stories, we are beginning to see balanced stories, like the one found last week in the San Francisco Chronicle. I have attached it if you missed seeing the article.
The stock market drubbing this past week due to the escalation of oil prices could potentially have an effect on activity, as consumers may decide to hold off on purchases. Until oil prices stabilize or head downward, negative consumer confidence could spill over in slowing the recovery in the housing sector.
One part of the market that is less impacted by the machinations of the stock market is the high-end. Two high-end listings in Piedmont went into escrow. One listed at $7.8 mil. and another at $5.6 mil. In San Francisco a home listed over $6 mil. was put into escrow this past week. Obviously, the wealthy feel real estate is a high quality asset during times of financial instability.
The next few weeks we may find a receding of activity due to the Memorial Day holiday, graduations and weddings. This is typical. Much will depend on what occurs in the financial markets.
One potential bright spot is we are hearing that a number of sellers will be bringing their homes to market. The word is that these properties are in desirable areas and will be priced for current market conditions. The demand is there and these new listings could give a nice boost to the market to off set any negative influence of the stock market.