Foreign Buyers, Foreign Sellers in Our Real Estate Market

I just had an email from a friend, asking about our Coldwell Banker International Division. Her brother owns property in the U.K. and wondered about exposing it to the American market. Interestingly, I read an article last night about ultra-wealthy Russians who are buying luxury properties in the U.S., including Donald Trump's 62,000 square foot beachfront mansion in Palm Springs, which recently sold for $95 million to a multi-billionaire from Russia. (The photo is of the pool area.) Our weak dollar, concern about stability at home, and the nouveau riche buyer's desire for international holdings have combined to make these the new buyers for "trophy" properties. They are replacing Americans who were the previous buyers of these homes...subprime barons and hedge fund parvenus who were done in by the credit crunch.

The New Housing Bill

Great News!! President Bush just signed into law the Housing and Economic Recovery Act of 2008. This is a major victory for REALTORS®, consumers, and the country.
This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.
The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas such as ours to $625,500.
Although I would have liked Congress to make permanent the current $729,750 loan limit, the new loan limit of $625,500 will still allow many California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market.
For more details on all of the provisions in the new law, please use the link below.
http://www.realtor.org/gapublic.nsf/pages/hr_3221_key_provisions?OpenDocument

Staged to Sell

I'm often asked what the difference is between a stager and an interior designer. Interior designers personalize, while stagers depersonalize. In other words, stagers ready a house so buyers can picture themselves living in it. A good stager will emphasize the property, rather than the seller's personal items. No matter how nice or interesting the seller's art collections, family photos, or quirky knicknacks, the object is to sell the house, not what's inside.
Think of staging as detailing a car to add value before selling it...That's exactly what a stager does to a house.
Statistically, a staged home is on the market half the time as an unstaged one, and the initial cost of staging is dramatically less than a price reduction on one that sits on the market.

Home Staging is Becoming Standard in R.E. Sales

I've watched the first two segments of "Stagers," a new show on HGTV. They feature creative, and rather crazed designers who make a house into a desirable home that attracts buyers.
In our Bay area, a vacant, or lived-in house is no longer the norm. As prices hover around a million dollars, staging is the crucial step needed to help buyers connect with a listing and visualize themselves living in the home. Each and every home presents a staging opportunity. Curb appeal is generally only the initial view, but there is so much more needed to create the “wow” factor.
Every real estate agent should be equipped with all the necessary skills and tools to educate the sellers on how to present their home for a fast sale. Very few buyers will make an offer on a house that doesn’t get them excited, and staging showcases the house in the best possible light. After all, we never get a second chance to create a great first impression, so it's imperative that the house is “dressed to impress."

Home Sale Pointers from the Wall Street Journal

“If you really want to sell this place, you need to think and act like a salesperson.” I read this well thought-out statement this past week in The Wall Street Journal with great interest. The reporter, David Crook, in his article entitled “How to Sell a House, When You Have to Sell it Now” gave sellers seven tips on selling a house in the current market.
While some of the statements are debatable depending on the neighborhood and market, he especially underscored the importance of sellers' separating their emotional attachment to their family homes from their financial interest in their family’s largest asset.
Here is a paraphrase of what Crook wrote as his Seven Tips on Selling a House in the Current Market:
Don’t Wait Around: Even in the better housing areas, it's taking a long time to sell houses.
Fix it Up and Clean it Up: Buyers are taking your house out on a date. It has to make a good impression.
Price it Cheaply: Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won't fly.
Hire a Top Real Estate Agent: Get the best, most aggressive selling (listing) agent you can find.
Promote. Promote. Promote: Don't rely on the agent to do all the work. The agent should pay the usual marketing costs, but you should be prepared to pay for extras, especially if you insist on more expensive or untraditional promotions.
Play the Banker: If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer's purchase.
Take the Offer: If any qualified buyer comes in with a reasonable offer, be prepared to accept it.
The key point to remember is pricing. Pricing is probably the single most important factor in today’s market, regardless of the property’s price point. Buyers and sellers who face the realities of today’s market seem to be the most successful. Those who are living in the past will languish on the market.

The Hidden Factor in Moving Quotes

Many of my clients are Seniors who have fragile collectibles, and a recent article fro The Move Advocate reminded me that the cost of an interstate move is primarily determined by three factors: distance, weight, and extra services rendered.
Distance and weight are easily understood, but many transferees are uncertain about the 3rd factor, extra services.
Extra services are often required to ensure that valuable or cherished items are moved safely from one location to another. This may include dismantling, reassembling, and/ or crating and uncrating of items.
Items requiring additional attention may include:
Artwork, Trophies, Plasma televisions, Pool tables, Grandfather clocks, Antiques, Pianos, Exercise equipment and Glass table tops.
Since the van line provider assumes liability for the safe shipment of these items, it is often at their discretion whether these services will be required. Sometimes it is the transferee that requests additional services for items that are especially important to them.
The Move Advocate strongly urges transferees to obtain visual surveys of their household goods. An on-site survey will allow the surveyor to note any items that will require special handling and those charges will be reflected in the written estimate.
Moving is traumatic enough, without having the added stress of a broken "treasure."

Bank Owned Properties

This morning at our Realtors' Tour Meeting, we had a broker talk about REO (Real Estate Owned) properties. These are homes that have been foreclosed upon, and are made available for us to sell. Problems abound. The banks are not willing to have upfront inspections done on these properties, and this usually costs them more in the long run, since flaws that show up in buyers' inspections often create a renegotiation of the contract, and a lower price. Lender-owners also refuse to use local contracts, and insist on state forms. Then they copy the information on to their own version of the contract, which must be read line by line to make sure that the buyer is protected. One such contract called for a $1500 a day late fee if the buyer didn't close escrow on time! It is best to involve an attorney in these transactions...and well worth the cost.

New CA State Law--Trees vs Solar Panels

The controversy that started here in Sunnyvale, and that I wrote about in several posts has been settled. The Governor signed a bill yesterday that clarifies the "who planted first" legal battles that could be more frequent as solar power grows in popularity. State Representative Simitian of Palo Alto wrote the bill, the result of a backyard quarrel in Sunnyvale which grew into an expensive legal fight.
A law signed in 1978, when residential solar was rare, forced Sunnyvale residents to cut down two large redwood trees that had been planted prior to the installation of a neighbor's solar panels. After a failed mediation, and paying over $37,000 in legal fees, the tree owners gave up their fight. The new law now will protect any trees that were planted before a neighbor installs solar panels, and a solar panel owner who complains of trees planted after the installation can sue in civil court, but the tree owners are no longer liable on criminal charges, as the Sunnyvale couple were.

The Big Give for Habitat for Humanity

It’s been 10 years since we first put on our hardhats and picked up hammers to build a better future for Habitat for Humanity families. Year after year, Realtors at Coldwell Banker come together to donate our time and money and we’ve really made a difference! In 10 years, we’ve collectively raised $1.75 million and participated in building 65 homes throughout Northern California in 40,000 volunteer hours. And it won’t stop there!
Today, it is with great pride that I announce the launch of our 10th annual Habitat for Humanity Raffle entitled, Coldwell Banker’s BIG GIVE, in honor of Oprah Winfrey’s inspiring message to “pay it forward” and help those in need. Our Habitat for Humanity Raffle officially launches today and will run through September 12. Raffle tickets are just $2 each and every member of the Coldwell Banker family is challenged to sell at least 50 tickets to raise $100 in order to achieve our goal for raising $400,000 for Habitat for Humanity in 2008!

Eichler Lovers Stay True to Style

In yesterday's post, I wrote about the terrific response to an Eichler home in Sunnyvale being sold by the original owner. The listing agent was my longtime friend, Norma Marcus, who has been selling these homes for more than twenty years. Because of their unique design, Eichlers have created many niche business opportunities for local entrepreneurs. A newsletter that started in Marin for a couple of thousand Eichler owners has grown into CA-Modern magazine and Eichler Network Online, which has over 25,000 visitors a month. Eichler owners can find information there about qualified inspectors, workmen and materials from other homeowners online, and also find sources for replacement parts and even replicas of original design materials.

Eichlers and the Local Market

Last weekend, I held a property open with a friend. It was a forty year old Eichler home, being sold by the original owner...unusual in these parts. The house was beautifully maintained, and showed perfectly. It was also in a desirable westside area of Sunnyvale, with excellent Cupertino schools. Eichler homes are known for their floor to ceiling windows, and their open feel. This one also had an atrium entrance and a cul de sac location.
Perfect for casual living, these houses have great appeal for young buyers looking for their modern style, but I have found that home seekers either love them or hate them. Several families who came through the open house were anxious to present offers as soon as possible, whereas others questioned the lack of air conditioning and insulation on hot summer days.
Because no more are being built, growing demand fuels competition. There were four offers on this one in the first week, and it sold quite a bit over the listed price of nearly $1.2 million, with no contingencies and a large down payment.

A Reality Check on Local Realty

“The median price paid for a Bay Area home plunged to $485,000 in June, marking the first time in more than four years that it was below the half-million mark.”...a new report from Data Quick. Of course, news media outlets ran screaming with headlines like “Home sales plunge to near record lows” but how can you not look at the other side? The fact is, when prices fall to their lowest levels in four years, what it becomes is music to the ears of buyers. And here comes that first time home buyer again, creating that domino effect for what could be our entire housing market in the next several months.
Yet another reason? The Commerce Department said Thursday that construction of single-family homes dropped 5.3% in June to a seasonally adjusted annual rate of 647,000 units, the weakest performance since January 1991, another period when the housing industry was going through a severe downturn. So how could this possibly be good? The fact is that our population is growing and over the next several years, we are going to continue to need additional housing. When construction of new homes slows, it means demand increases. It’s Economics 101.
As for our Sunnyvale/Cupertino market, Cupertino saw a huge surge this week with their pending sales increasing from seven to 19! This market seems to change with the wind and we never know from one week to the next whether inventory and sales will be up or down. Sellers who seem to prevail are those who price their homes competitively from the start and don’t test the waters...and good schools are still the key.

Should You Defer Your Home Buying Dream?

When you put off your home buying decision to wait for “prices to go down” in a rising interest rate environment, it can cost you your dream.
Can you afford to wait?
The payment you could afford several months ago may qualify you for much less house now. Here’s why...
In May 2008, a person could buy a house for $920,000 with a fixed rate of 6.25% and a monthly payment of $4433 with $200,000 down.
Today, only 2 months later that same payment of $4433 would qualify them for a purchase price of only $880,000 with the same $200,000 down because interest rates have continued to rise. This is the math:
May 2008: Purchase Price: $920,000, Interest Rate: 6.25%, Loan Amount: $720,000 Payment:$4433.
July 2008: Purchase Price:$880,000, Interest Rate: 6.75% Loan amount:$680,000,
Payment:$4410.
If you notice, both these scenerios use the conforming/jumbo loan amounts, presently capped at $729,000. For higher loan amounts....true jumbo loans...the current interest rate is now 8 percent!

Tied to Fannie Mae's Apron Strings

The House of Representatives, has moved to approve the President's plan to rescue Fannie Mae and Freddie Mac, but intend to tie it to almost $4 billion in grants to help neighborhoods highest hit by foreclosures. This is part of a broad housing package, but President Bush has threatened to veto the bill if it includes the neighborhood aid. It will be interesting to see what happens in what is becoming a partisan battle. Democrats argue that the money will prevent urban blight, but the Bush administration calls it a bailout for lenders who caused the problem in the first place. With the FBI investigating the possibility of loan fraud in the now defunct IndyMac Bank, the situation should be in headlines for some time to come.

More on the Freddie and Fannie Saga

With the White House primed to raise limits on what Fannie Mae and Freddie Mac can borrow from the Treasury Department and to empower the Treasury to buy stock in the companies, it looks as though the government will be more involved with these companies than ever before. Supposedly for-profit companies, these have both been quasi-governmental since they were formed.
Even though they have never been involved in the subprime mortgage market, and have only bought loans that met high standards...as Congress intended, they have still been caught in the tidal wave created by those defaults and a faltering economy. As the housing market has plunged, even their "no-risk" borrowers are defaulting.

What's the Real Story on Fannie and Freddie?

...not a soap opera, but starting to read sound like one. Fannie Mae and Freddie Mac were the stars of the mortgage industry during the housing boom. They currently hold or guarantee loans valued at more than $5 trillion dollars, about half of the nation's mortgages.
Fannie is a shortened version of the Federal National Mortgage Association, and Freddie stands for the Federal Home Loan Mortgage Corporation. These two companies buy loans and repackage them as securities. Now that more and more borrowers are in foreclosure, investors are starting to panic, and shares in the two have fallen more than 45% this week.
The federal government is ready to intervene and maintain their functions in the mortgage market, but this would mean extending the line of credit to the two organizations to $300 billion each. Right now, they each have a $2.25 billion credit line, established nearly 40 years ago by Congress...but at that time, Fannie Mae had only $15 billion in outstanding debt. Now Fannie Mae carries $800 billion in debt, and Freddie Mac, about $700 billion.
The failure of either one of these companies could be catastrophic to the worldwide economy. Scary stuff in already scary times.

Sunnyvale Public Safety's Canine Unit

Word on the streets among crooks and drug dealers is, “Stay out of Sunnyvale because you will get arrested.” This is the highest compliment a police department can receive, Sunnyvale Deputy Chief Mark Stivers proudly told members of our Association of Realtors' Cupertino/Sunnyvale District at our Thursday tour meeting.
The members of the department responsible for this compliment also showed up...its canine unit, including the dog handlers and the star of the show, Quest, an eight-year-old German Shepherd, one of four dogs who form part of the unit. There was also “handler extraordinaire” Officer Chris Fontaine, Quest’s trainer and partner. Then Fontaine, one of just two officers in the department presented the Officer of the Year award last week, demonstrated how Quest is trained to find narcotics.
Quest is as friendly as can be, but he becomes a police dog when he is on duty. His collar is his uniform, and when it is on, he is alert and ready.
The officers were at the meeting not just to speak about their canine unit, but also to receive a $2,000 donation from the Realtors. The money will be used to purchase lifesaving equipment for the dogs, such as oxygen bottles and masks, as well as other important equipment for their fourth dog, which the department just purchased through a Homeland Security grant.

Home Values & Retirement Planning

I was reading the AARP Bulletin yesterday...yes, I am that old...and saw an article about people who have had to put their plans for an early retirement on hold. I would have expected the survey result that showed one in five people aged 55 to 64, and one in four aged 45 to 54 are delaying retirement because of the economic downturn, but it surprised me to learn that one in three of the younger group blamed falling home values for their decision, and 18% of those over 55 said the same.
Tumbling stock prices certainly erode most Americans' nest eggs, but a large number of older workers have relied on their home equity's continuing to rise. Instead, many are finding that this "safe harbor" when stocks fell in the early 1990's is now just as unreliable. A large number have also been caught up in the mortgage crisis and face major losses and even foreclosure.

Green Homes Are Selling Fast

When I wrote about home shows on television yesterday, I mentioned in passing that Planet Green had several shows about housing. These run back-to-back on Fridays, and are called: "World's Greenest Homes," Greenovate," and "Renovation Nation."
In a fragile housing market, sales of new homes dropped to a 13 year low nationwide and were down 45% last year in Santa Clara and San Benito counties. But recently seven of the nine houses in San Jose's Orchard Heights Development sold on the first weekend they were open. These houses in the Evergreen area started at around a million dollars. What makes these homes different? Developments such as Orchard Heights and Falcon Place in Willow Glen have integrated solar roofs, thicker insulation in the attic and walls, low-emittance dual-pane vinyl windows, and "smart" thermostats. They also feature energy efficient appliances and water saving plumbing.
Buyers may not choose a home strictly because of these green, environmentally friendly features, but if the price, location and floor plan are what they want, being green is a bonus.

House and Garden TV

With good television especially scarce this summer, I find myself watching more shows on HGTV. A favorite is "Design Star." New shows seem to pop up every week...one called "Staging" starts soon. The genre is spreading to other channels too, with Planet Green showing several on energy saving, and Channel 7 featuring the old standby, "Extreme Makeover: Home Edition".
A&E and TLC both have shows on flipping..."Flip That House", and copycat, "Flip This House", but the endings are less happy in this slower real estate market.
Audiences for these shows have grown in the last three years, and shows like "Designed to Sell" and "House Hunters" draw more than a million viewers. Some other ideas being tested are "Date My House" in which selected potential buyers can throw a dinner party or even spend the night in a house to "date" it. (They usually find enough flaws in that time to talk themselves out of making an offer.)
One of the most realistic from a Realtor's viewpoint is a new show called "Property Virgins". In this one, a real estate agent shows first time buyers what they can really get in their price range...usually less than they think they can...and goes through the negotiating process with the sellers for them.

Drought Resistant Plants

I hope that you had as good a Holiday weekend as I did. Good friends, music, and much(too much) eating out.
I'm tired of reading (and writing!) depressing economic news. With more heat expected this week, perhaps more hints on drought resistant gardening are timely.
Water is becoming scarcer as we all hear on the news (over and over). Our usage patterns are still basically the same, with more than half the water each home consumes being used to water the garden. The easiest way to use less water in your home is to water your lawn and garden less. The easiest way to achieve this is to use a garden timer to water before dawn, and shorten the duration. If you currently water your lawn every other day at 9 am for 20 minutes, switch to 4 am for 15 minutes, every third day.
It may make sense to consider this to be a permanent change, as this drought may last a long time. If you discover some of your plants need high amounts of water, please consider changing them for drought resistant plants. There is a very long list of drought resistant plants published by the Santa Clara County Water District.
www.sscwd.org/Drought.doc

Jingle Mail

I picked up this morning's paper, and instead of the the usual sticker affixed to the front page, offering a promotion at Lowe's or Orchard Supply, today's read: "Foreclosed Home Auction. Over 750 Must Be Sold!"
The old expression, "Home Sweet Home" has been replaced by a new one..."Jingle Mail." This describes keys left in mailboxes for lenders by homeowners who would rather default than fight their rising payments under adjustable rate mortgages.
Consumer advocacy groups admit that struggling homeowners in California are more likely to lose their homes to foreclosure than they are to receive loan modifications from lenders.
New expressions are joined by new math. $1.3 trillion: the cost of the subprime mess, according to the Fed and analysts. This figure includes $879.6 billion in lost home equity and $400 billion in investment bank write-downs.

Happy Fourth of July

With the stock market tanking and no state budget in sight, it's hard to keep a positive attitude while we celebrate the birthday of this great nation.
Sure..we have good food (although prices are spiraling upward) and happy family get-togethers (hampered a little by the high cost of gasoline), and fireworks (where they aren't canceled by fire danger). But despite these niggling problems, life is good for most of us and we are especially lucky to live in this beautiful Bay Area.
Enjoy the good things, and look forward to a better future.
Happy Birthday U.S.A.!

Can History Really Be Changed?

There is a new bill coming out of the California State Assembly, AB 2204, which would require county recorders to review every deed or other related documents, including CC&Rs, and remove restrictions from historic title record before the transfer of property can be recorded. County recorders would then be authorized to charge a fee for the review and editing of these documents...around $500 - $1000 in costs to transactions without actually protecting anyone from discrimination. This fee will be added to buyers' costs at closing, when they can least afford it.
Existing law already invalidates any provision in a deed of real property that restricts the right of a person to sell, lease, rent, use, or occupy the property based on race, color, religion, sex, marital status, national origin, ancestry, familial status, disability, source of income, or sexual orientation.
Existing mechanisms (the latest of which was approved by the legislature only last year) can already deal with the issue effectively.
Besides, AB 2204 seeks to erase history. Unconstitutional covenants are powerless historical relics that are already unenforceable, but still in the historic record. Philosopher George Santayana said, "Those who cannot remember the past, are condemned to repeat it." Rather than to pretend that such discrimination never existed, isn't wiser to learn from our society's past mistakes?

What Makes a Bedroom a Bedroom?

This morning on the office tour, we saw a house with a tiny room...probably 6X8, with a closet and a skylight. Was that a bedroom? Years ago, we were taught that having a closet made a room a bedroom, but now we know better. For safety reasons, a bedroom must have a window that is large enough and low enough to enable emergency escape, and to provide adequate natural light and ventilation. Bedroom windowsills must be no higher than 44 inches above the floor, although lower sills were often allowed in older homes. In a basement bedroom, the sill can be higher if there is a permanent ladder or stairway to the window opening....but if the opening is below grade level, there are all sorts of additional requirements.
And closets? They are included in homes as a standard of practice, but are not a legal requirement in any building codes.