More about Short Sales

As usual, we had an interesting speaker at our weekly Silicon Valley Association of Realtors (SILVAR)tour meeting this morning. Ron Ricard talked to us about "Short Sales," which occur when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs, such as property taxes, transfer taxes, and commissions and the seller isn't able to cover the difference.
Next to other areas of the state, these are still pretty rare in Santa Clara County. A few statistics: Last year, there were 960 notices of default issued by area lenders; this year, there were 1870. A year ago, 13 properties went back to the lender; this year, there were 290. Only 74 were sold in foreclosure sales.

Ron asked the crowd at our Sunnyvale/Cupertino tour meeting if anyone currently had a short sale listed...only one agent raised his hand. Compare this to Sacramento county, where of the 2200 properties currently on the market, nearly 1/3rd are listed as short sales!

Sunnyvale Downtown Progress

With the Sunnyvale Art and Wine Festival happening this weekend (Look for me at ticket booth #1 on Sunday afternoon!), it's time for an update on the Town Center.
The old mall has been demolished, and new fencing, designed to cut down noise and dust from the demolition, is being installed along West Iowa, and will be painted soon.
Workmen have finished the primary digging to locate underground utilities on West Iowa and West Washington, and a permit has been issued for Sand Hill to start the preliminary work on the Center's new office building and underground parking structures.
If you are interested in learning more, the city will be presenting an informational display of the project on Thursday, June 14, from 10:00am to 1:30pm at Plaza Del Sol, 200 West Evelyn Avenue.

The Grand Finale...Top Selling Secrets

Go With the Flow: Open up your rooms, and create the illusion of space.
Go From Trash to Treasure: Usable space is key. Rent a storage unit if you must, but turn that "junk room" into a gem.
Match the Book to Its Cover: Don't create a lovely exterior and have a disappointing interior. First impressions are the key to a home sale.
Complete the Picture: Make the house "move in ready." Pay attention to details like missing closet doors and light switch covers that need replacing...the buyers will.
Go Over the Top: Pick a project and spend a little extra money. It will pay off in your sale price!

....And remember, our buyers always ask, "How long has this house been on the market?" If it has been on for too long, they suspect that there is something wrong with it.
Price your house to sell, not to sit.

Selling Tips, Revisited

#20. "Cook Up Your Kitchen". The kitchen is the single most important room, according to buyer surveys. Any money that is spent on even modest alterations is a wise investment.
Cabinets that have been re stained and have new stylish hardware can look brand new.
Get rid of that wallpaper, and paint with a soft tone using high gloss or enamel.
#21. "Use Counter Intelligence". Granite looks great, and there are remnants available that might work for your counter. Prefabricated pieces are also much less expensive than custom made.
#22. "Apply Yourself". One improvement that is sure to increase value and instantly update your kitchen is to replace worn, dated appliances with new ones. Buyers are sure to pay extra for those shiny new ranges, dishwashers and refrigerators.
#23. "Open Up and Collect Offers". Buyers love the "great room" feeling that they see in new construction. The increase in light and space brings higher offers. Have a professional assess that a wall is not load bearing, and check it for plumbing or electrical wiring. Then bring it down, and open it up!

More Selling Tips, Continued

#17. "Primp Your Vanity". Updating bathrooms can be the cheapest way to impress potential buyers...An outdated bathroom equals an outdated house. Be sure to use high end materials, and you can't lose, especially when replacing the lighting fixtures and hardware. Fresh paint accomplishes wonders. A good primer coat and enamel paint in a soft tone set the stage.
#18. "Don't Pour Your Money Down the Drain". An amazing transformation can be made by replacing the shower door, and cleaning or redoing the grout...and don't forget the tub. A worn bathtub can be refinished for as little as $250.
#19. "Whisk Them Away". Accessories can make all the difference. Hide away your personal items, toothbrushes and toiletries, and replace these with attractive baskets, candles and plants for the open house. Use the best quality towels you can afford....bright white ones look fresh and luxurious.

Even More Selling Tips

#14. "Design to Dine". Define your dining space, especially if the floor plan includes a living-dining area or a great room. An attractive table and lighting fixture are essential.
#15. "Know Your Competition". Plan to tour other homes in your neighborhood or price range at Open Houses, or with your Realtor. These are the properties that potential buyers are seeing and comparing to yours.
#16. "Pare it Down". Your master bedroom should reflect a mood of comfort and relaxation. This is not the place for multiple uses...Find another place for that computer! It's all about the bed. Attractive bedding is the key to a feeling of comfort and elegance, and lighting and accessories should compliment the decor. Create instant luxury with high quality bedding, and choose your paint color from its pattern.

Still More Selling Tips

#9. Deck it Out. Sand and refinish the deck, or power wash the patio. Remove dated patio covers. Don't forget that this is the first view buyers get of the back yard.
#10. Have Them at "Hello." Statistically, you have only ten seconds to make a first impression. Walk into your house, and pretend to be a buyer...be objective.
#11. Fire Up the Fireplace.Make this the focal point of the room, and never block it with furniture. Research shows that a fireplace is fourth on a buyer's list of "wants."
#12. Furnish for Selling.Pulling furniture away from walls creates the illusion of more space. Choose pieces that reflect the room's size...big furniture for a large open space, small furniture for a smaller room.
#13. The Money's in the Details.The extra touches, like crown molding, move your house above the pack.

More Selling Secrets

#5. "Designed to Smell." Pets, food odors, dirt and mold are all reasons for buyers to take just one sniff and head back out the door without seeing your house. Open all the windows, and bake some cookies. Realtors sometimes boil cinnamon on the stove. There are also scent packets available at paint stores. Add one to the can of paint, and accomplish two jobs in one!
#6. Clear out, Clean up, and boost your curb appeal. A little work in the front yard goes a long way. Don't forget to use color in your plantings. Liberal use of red mulch around trees can add color, too.
#7. Embrace Your Architecture. Details like shutters can make the house's exterior "pop."
#8. Opportunity Knocks. A fresh coat of paint, plus new fixtures and hardware on the front door make a wonderful first impression, and encourage buyers to enter. Don't forget the mailbox and house numbers!

#1 Top Selling Secrets

Yesterday, I talked about the "Designed to Sell" crew's recent show featuring advice for home sellers.
Their first hints are those a Realtor would find obvious:
1. De clutter. Buyers entering the house will see the boxes, piles of books and scattered belongings, and assume that there is insufficient storage.
2. Clean. This is without a doubt the cheapest thing you can do. Everything should shine, but put special emphasis on the kitchen and bathrooms. If the tile grout is discolored, consider re grouting...it make a major difference.
3. Fix it or Forget It. Buyers who see deferred maintenance will start mentally subtracting dollars for any repairs that aren't done, even if they are minor ones.
4. Go neutral. Paint is "money in a can." Bright or dark colors can be off-putting to buyers. Soft, nature inspired light colors are best...think "mushroom." And don't forget a good primer coat over dark colors. It will save you hours of extra work.

Top 35 Selling Secrets

Last weekend, I saw a terrific Special on HGTV (House and Garden Television) with the above title. Some of the "secrets" were more obvious than others, but they were all useful for potential home sellers who want to maximize their profit.
The three "Designed to Sell" teams from Chicago, Los Angeles and D.C. put their heads together and came up with real estate advice, design-savvy tips, and handyman secrets that any seller can use. Their final word was..."Do Something!" Most homes are not ready to be seen by buyers, and small improvements, involving little or no cash outlay can make all the difference in creating a fast sale for top dollar. The "Designed to Sell" crews have a maximum budget of $2000, and are able to transform any house they tackle.
I will be devoting the next several posts to these useful tips. If you'd still like to catch the show, it will be repeated on June 3rd at 5 PM ET/PT.

An Interesting Comparison

I recently came upon a an online article by Ken Braly called, "Finding a House, Finding a Spouse." He describes how he was single and living in a rental, and decided that it might be easier to buy a house than to find a bride. After his home purchase, he realized that the process was nearly the same for both quests.
Think about it. The strategy is so similar in both searches: planning, market research, inspection and appraisal, making the offer, and living happily ever after.
Some of his examples were great. The MLS versus Online dating sites, false advertising("needs a little TLC" equals a tear-down, "has a great personality" means....)
And then, of course, there is the Big "C",Commitment, to both a home purchase and a relationship. Wouldn't it be nice if potential spouses came with a written disclosure statement of all hidden defects like houses do?

Home Sales Down, Prices Up

Fewer homes changed hands in the Bay Area last month than during any April since 1995. A total of 7,447 new and resale houses and condos sold last month, down 10.5 percent from March, and down 18.4 percent from a year earlier.
In Santa Clara County, sales of all types of homes combined fell 17 percent compared with April 2006.

With sales volume on the decline for the past two years, one would expect Bay Area prices across the board to be falling more than they have. In other parts of the state, especially the least expensive areas, prices have dropped. But, according to DataQuick's John Karevoll, "The Bay Area has much more resistance to price declines than the rest of the state does. People are much more willing to ride it out, and not buy and sell."

At our Thursday Sunnyvale/Cupertino/Santa Clara tour meeting, we had 65 new listings on tour, compared to the 40 to 45 in previous weeks. If inventory continues to rise, we could see a more balanced market by summer.




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Who Can Buy a House in Silicon Valley?

According to the California Association of Realtors, only 25% of residents can afford
to buy their first home in the State. That percentage in Santa Clara County, with a median price range of $803,000, is even lower.
Sales are down nearly 20% from a year ago, but not in the higher priced areas of the county.
(See my May 8 post, "When It's Hot, It's Hot.") With fewer less expensive homes selling recently,the median is skewed by all the sales in the high priced areas.
In East San Jose and other entry-level areas, with homes in the under-$700,000 price range, inventory is high, and the market has slowed.
I have a small condo listed in the North Valley, in a complex where sales a year ago were $320,000 to $325,000. There are five for sale there at bargain rates of $299,000 to $310,00, but the only recent sale was a remodeled unit listed at $295,000, a major reduction from last year's values...indicative of the tightening credit standards for first time buyers.

What's Happening in Downtown Sunnyvale?

Through my contacts in the Sunnyvale Chamber of Commerce(www.svcoc.org), I try to keep current in the downtown "development." This has been exceedingly slow in coming, but it looks as though we will finally see a beginning of our new downtown.
Peter Pau, of Sandhill Properties, who is the owner/developer of the Town and Country center, and also the chosen developer of the Town Center, has finally received approval for demolition of the structures surrounding Macy's. This process is expected to take several months, and then construction of two underground parking garages will start.
Sand Hill intends to build townhomes and condos on the existing Town and Country site. When the informational website they are planning is complete, I'll provide a link.
Won't it be great to have a downtown again!

The Florida Syndrome

I just read an article in the new issue of "Money" magazine about a professional couple who took an early retirement, planning to invest most of their savings in Florida real estate. They were experienced at flipping (buying, remodeling, and selling) and bought two houses in 2005, ready to add to their retirement income. Unfortunately, they were caught in the downturn of the Florida real estate market, and find their nest egg disappearing while they carry the payments on these unsalable properties.
My niece Linda and her husband, Dale, were nearly caught in this same trap when they bought two investment condos near their Florida home just before the bubble burst...but they are among the lucky ones. One unit was still in the construction phase, and they were able to cancel the sale. The second is rented.
Could this ever happen here in the Bay area? I tell my clients that I threw my crystal ball away years ago, but maybe this is a cop-out. Bubbles don't seem to burst around here, but we've certainly seen slowdowns in the market when inventory grows and the balloon slowly deflates.

Dropped by the "Good Hands"

While most other insurance agencies are heeding the California Insurance Commissioner's call to reduce rates, (after a recent study showed that some of the state's largest insurers were paying out less than 50% of homeowners insurance premiums on claims) Allstate actually filed a request with state regulators in September for a 12% rate increase.
Now Allstate has announced that the company will stop writing new policies for homeowners and landlords in California, as of July 1.
Reductions by the other top insurers have already saved their customers in California more than a billion dollars, according to the new Insurance Commissioner, Steve Poizner.

Danger for "Short Sale" Sellers

We've been lucky in Santa Clara County next to the rest of the country...and not just for our weather! The number of so-called "short sales" (property sales where the selling price is less than the loan amount) and foreclosures has been much lower than elsewhere. But we should still be wary of an unexpected tax consequence.
If the mortgage holder forgives part of the money owed, or less is collected on a foreclosure sale than is owed on the loan, the IRS considers this amount to be taxable income, even though no money is received by the homeowners, and they may already be in a bad situation financially.
There is a bill currently before the House Ways and Means Committee (HR 1876) that would exclude debt forgiveness on a principal residence from the tax code. This would be a major boon to former homeowners who have probably lost thousands of dollars in equity already.

Affordable Housing Week in Santa Clara County

Events being held all this week range from home buyer workshops to a bus tour of affordable housing developments in Palo Alto. There will also be seminars on ending homelessness and finding solutions to the affordable housing crisis in Silicon Valley. On Saturday, May 19, the week will culminate with a fair sponsored by Neighborhood Housing Services Silicon Valley, a local nonprofit group. Over forty organizations will take part.
Most events are free and open to the public, but some require advance registration. You will need a ticket for the bus tour, since space is limited, but the $10 fee includes a light breakfast and lunch.
For a calendar of events and more information, go to http://www.affordablehousingweek.org/.

What Stays...What Doesn't, After a Home Sale

The subject is coming up more frequently around our Coldwell Banker office. Someone buys a house and the chandelier is replaced by a cheaper fixture, or the wall unit that appeared to be built in, wasn't. Most of these potential misunderstandings can be avoided by full disclosure in the contract, but some "grey areas" are lost in the excitement of negotiating the sale. Do you want the refrigerator to stay? Get it in writing. Fixtures are those features that cannot be removed without causing irreparable damage to the property. Anything else may be considered personal property. But we're in California...what about a bookcase that's bolted to the wall in earthquake country? Real Estate 101..."What does the contract say?"

New Counties offer Proposition 90 to Seniors

Back in '88, California passed Proposition 90, which allows homeowners over 55 to transfer their existing tax base to another county in the state that allows this transfer. This property must be their principal residence, and the replacement property must be of equal or lesser value.
Counties have been gradually dropping off this list, but now there are two new additions to the counties that have adopted a Proposition 90...good news for retirees.
The current list includes: Alameda, Kern, Los Angeles, Orange, Modoc, San Diego, San Mateo, Santa Clara and Ventura Counties.
Next year, the Santa Clara Board of Supervisors will be looking into dropping our county from this list in their 2008 budget discussions. If you would like to see it remain, plan to get involved.

Making Lemons into Lemonade

Trade with China : 2007 NOTE: All figures are in millions of U.S. dollars.
Exports 5,479.4
Imports 22,725.4
Balance -17,246.1
March 2007
Total for the first three months of this year is -56,950.8
SOURCE: U.S. Census Bureau, Foreign Trade Division, Data Dissemination Branch, Washington, D.C. 20233
Scary figures, but there is an interesting development out of this disparity that affects real estate and affordable housing. So many storage containers had been shipping back to China empty, that proponents of affordable housing came up with the idea to use this material for building material...eliminates waste, helps the environment, and helps more people to have homes.

PMI, A Mixed Bag

Another interesting tidbit from Sue Baker-Dirickson (www.princetoncap.com/suebaker-dirickson) our in-house lender from Princeton Capital...Maybe taking a second mortgage and creating an 80-10-10 loan to avoid PMI isn't always the best idea.
Most borrowers know that PMI (Private Mortgage Insurance) has been required by lenders for loans with a down payment of 10% or less. This additional monthly payment was not tax deductible until recently, and was difficult to eliminate, although supposedly it could be dropped when the loan to value ratio reached 80%.
Now credit scoring has entered the picture. Rates on PMI are being adjusted to a borrower's credit. We heard about a recent case where a client's rate was 1.88%, a whopping $600 a month extra on a loan of approximately $400,000!
A 10% second mortgage (often from the same lender as the first, and at a higher interest rate) has been the way around PMI in the past, but now some lenders are offering another alternative. They are self-insuring, and giving 90% rates that are preferable to the blended rate of the 80-10-10...definitely something worth exploring!

When It's Hot, It's Hot!

The temperature outside is approaching 90 degrees, and that's appropriate, because our local real estate market remains HOT, too.
At our weekly office meeting this morning, the consensus among the agents was that the price point for multiple offer activity has moved up to $2,000,000. A slightly underpriced Cupertino property was listed around $1,400,000, and had thirty offers, selling for about $400,000 over the listed price!
Word from up the Peninsula is that the market there is strong, too. Los Altos agents are crediting the effect of Google money. In areas with top schools, like Palo Alto and Saratoga, the activity is still strong up to $2,500,000.
In general, the South County market is much slower, with the exception of Almaden...schools, again? An Almaden Valley house, listed at $1,425,000 just sold this week with 10 offers.

Sweating the Subprimes

Much of the excess housing inventory...except in our "oasis" around Sunnyvale and Cupertino...has been caused by borrowers who were tempted by the low payments on adjustable loans and interest-only loans offered a few years ago, and are now faced with unmanageable increases in their monthly payments.
Add to this major tightening in underwriting requirements by lenders caused by the subprime scandals, and you have the recipe for a softening real estate market.
Sue Baker-Dirickson, a senior loan officer with Princeton Capital, told us at the last office meeting that 100% loans are much more difficult to find and that most lenders are requiring 5 to 10 percent down payments.
Other changes for subprime borrowers: Stated income loans, in which income is not verified by the lender, are no longer available for salaried employees. Higher minimum FICO (credit) scores are often being required, and more importantly, buyers are now being qualified based on the fully indexed rate (the rate likely after the first adjustment) rather than the initial "teaser" rate.
Some loan brokers who've been around for a long time are saying that these are more like the rules from ten or more years ago...a healthy change.

What to look for in a condo purchase

At our annual Sunset Oaks Homeowner's meeting this week, we were delighted to hear that our complex was one of the best run in the area.
Values continue to rise for town homes and condos that are close to the workplace: i.e., Sunnyvale, Cupertino, Santa Clara and Mountain View. The buyers are a healthy mix of first-time homeowners and "downsizers" like myself.
The trick to making a successful purchase in this market is to compare monthly fees to maintenance quality and to find out the percentage of rentals vs owner-occupied units. Another "red flag" is litigation against the association. A lender will be watching for these signs, too.

Robert Bruss, in his column for Inman News, noted five key questions for condo buyers to ask.

1. How do monthly fees compare with competitive nearby complexes?
2. What is the financial condition of the Homeowner's Association? Are there any expected special assessments/
3. Is the association professionally managed?
4. What is the percentage of renters in the complex?
5. Ask several current residents, "What do you like best and least about living here?"

A condo or townhouse can be a great investment if you do your 'home'work!

Trusted workmen referrals

I just received an email from a neighbor who gets my monthly newsletter, asking for referrals for a kitchen remodeler and a landscaper. Realtors often are asked for recommendations of painters, plumbers, electricians and general handymen. We are especially careful to give the names of quality workmen (and women!) to our clients, because their work and reliability reflects on us.
Our office has solved this problem by sharing a frequently updated list of professionals that we have been happy with, including specialities and contact information. Feedback from satisfied (or dissatisfied) clients is essential in keeping the list current.
...one more reason that I like to work at Coldwell Banker, DeAnza in Cupertino!

Homeowners Associations and Earthquake Insurance

We had our annual HOA meeting at the Sunset Oaks townhouse development in Sunnyvale on Wednesday night. I've lived here for nearly 20 years, and the subject of earthquake insurance comes up every year. For a long time, we paid to have this coverage, and watched as the rates went up and the deductible got larger. Two years ago, the board assessed each homeowner over $200 to continue our earthquake insurance while keeping the monthly dues from rising precipitously. Last year, we finally voted to drop it. But on Wednesday, the subject came up again...after all, this is Northern California. Mark Shade, of N.A. Shade and Associates, who manages our accounting, told us that of the more than a hundred condo developments he represents, less than 25% still had earthquake coverage, and that half of those associations are dropping it. Coverage for a single family residence is expensive, but still possible. For a multi-million dollar development, that time is passing. We hold our breaths and hope for the best.

How To Survive a Remodel

This morning at our Sunnyvale/Cupertino Realtors' tour meeting, we had a presentation by Nancy Chillag, an attorney in Menlo Park who specializes in construction and real estate law. She talked about the pleasures and pitfalls of home remodeling, which she sees from both sides, because her husband is a licensed contractor. She stressed three basics: adequate planning and preparation, doing your homework, and having realistic expectations.She advised that having a 15% cushion in both timing and costs may be necessary, since projects more often than not take longer and cost more than the original estimate. She also stressed that if a contractor's bid is radically lower than his competitors, it's time to be suspicious. I bought a copy of her new book, an easy to follow, step-by-step guide to remodeling, called How to Survive a Remodel. It's available on her website, www./chillag.com, or through Amazon.

Staging a home?

I'm often asked if staging a home is necessary before a house goes on the market.
In our area, around three quarters of the houses we show are now staged. This is not a fad, but an expectation by clients looking for a townhouse selling for more than half a million dollars, or for homes that are a million or more.
They are conditioned to seeing a property in prime condition and free of clutter, and are disappointed when they enter a bare, vacant house, or one that has that "lived-in" look.
In a fast market, these less appealing properties will still sell, but having me arrange to "dress the house for success" for you will bring top dollar and be well worth the expense.

Welcome

This is the first of many posts in a new blog covering the Real Estate market in Santa Clara County, the heart of Silicon Valley.
My office is a strong one, number two in the out of the fifteen Coldwell Banker offices in our area.
Today, at our office meeting, we looked at graphs which showed single family and condo/townhome sales and inventory in the county, and a separate graph for Cupertino and Sunnyvale sales versus inventory. The contrast was amazing!
There is a major differential between weekly inventory in units and sales for the county as a whole, but in our immediate area...Sunnyvale, Cupertino (and Mountain View, too) the listings and sales run close together, and nearly match the hottest markets that we saw in the early months of 2004-2006. No wonder we're seeing multiple offers!