Sam Pritchard

• Manage |RSSI've been 4RealzEd!

If you have some time to invest in real estate investment, it's significantly better than mutual fund returns. It probably won't look so good if you use 2% appreciation, but real estate has exceeded inflation for most of the last 50 years, and should continue to do so. Admitttedly, we are a few years from significant appreciation right now, but the long term prospects are still very good. http://www.beautifulpasadenahomes.com http://www.beautifulpasadenahomes.com/blog.asp

What we're finding is that both buyers and sellers need reality checks in this market. A few years ago reality didn't seem to matter. Sellers have to accept market prices even if "I paid $50,000 more two years ago!" And buyers need to accept that they actually need money to buy a home...because they didn't a few years ago. We find that realistic sellers can sell in Pasadena even now, and that realistic buyers can find good deals that they're satisfied with. It's a matter of pricing and realizing how good is good enough. www.BeautifulPasadenaHomes.com www.BeautifulPasadenaHomes.com/blog.asp

It is interesting to notice how hazards such as erosion on nearby slopes affects price reductions. My experience is that sellers are forced to discount their asking price the most right after the hazard has made news. But as time passes, buyers tend to be less concerned about these "remote risks." In Southern California in 2005, we had the most rainfall that I can remember in the area. There were hundreds of examples of erosion destroying or threatening to destroy homes. Sellers faced a very similar problem to one described above: Buyers come and look at the erosion that's happened in the previous weeks and get scared. But now you don't hear buyers talk too much about houses falling down hills. After the earthquake in 1994, property values sank in Southern California because everyone was afraid of earthquakes. But in the years after, values rose dramatically even though scientifically the threat of another earthquake increases as time goes on. Now people are talking about fires because we've had so many fires recently. And everyone's worried about fire damage. My advice to the buyer mentioned in the question above is to find out whether this erosion was caused by an UNUSUAL amount of rainfall. Has the rainfall been higher than average in the past few months? This also affects your prospects of selling the home later. If the erosion was caused by an unusual amount of rain this would be my strategy: Buy now and negotiate a lower price based on the glaring risk of erosion. Then wait to sell it until you have two dry years in row when buyers will not see much evidence of erosion and haven't heard much news about it either. You'll still have to disclose the risk, of course, but the buyers will view it as a more remote risk along with other unlikely natural disasters, and you should be able to get top dollar for it. If erosion was caused by average rainfall, then the advice above is probably correct. Don't buy it because it will continue to erode and may fall down the hill. Sam Pritchard Realtor Pasadena, CA http://www.beautifulpasadenahomes.com http://www.beautifulpasadenahomes.com/blog.asp