Silicon Valley Real Estate

Do you want or need to sell your Silicon Valley home this year? If so, you ought to take the staging of your home very seriously. Often homeowners hire a Realtor (or other real estate licensee), ask for their advice on preparing the house and yard for sale, and then proceed to disregard all or most of the guidance given.

Why do would sellers hire an agent and then not take the professional advice offered?  Especially in THIS market? The result is frustrating for both the homeowner (who will not realize the best possible price) and for the agent (who cannot control the condition, but who is hampered in selling the home because of it).

To be candid, the odds are that you will not be able to sell your home in San Jose, Los Gatos, or Saratoga this year. Countywide, most homes are NOT selling. Actually, let's look at the numbers for just a moment - you will see that it's fairly sobering.

In the Cambrian Park area of San Jose (zip codes 95124, 95118 and a little of 95008), there are 241 single family homes and condos or townhomes for sale (the "active listings"). In that same district, just 109 are pending sales. This refects about a 45% chance of selling.

In Almaden Valley, an upscale collection of neighborhoods comprising the 95120 zip code area of San Jose, it's much worse. There are 121 houses and townhouses or condominiums for sale, and a mere 34 which are under contract to sell. The odds here are 28% that you'll sell.

For Los Gatos (95032 and 95030), it's 203 available vs 50 pending. Down to 24% opportunity to sell.

Saratoga (95070) has 152 active listings and just 33 pendings, or a 21.7% sales success.

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"How long will it take to sell my home?"  This is a perenial question among home sellers in Silicon Valley.  Real estate professionals can look at the statistics and, when experienced and active in your local market, tell you what they believe will happen based on the absorption rate and days on market numbers.

We know that the national average is that for approximately every ten showings, a home should get an offer. It may or may not be an offer that results in a sale. Today's market in the San Jose area is more sluggish than usual, but homes are still selling in many areas within a month if all is right when it's offered for sale. One thing is for certain, though, and that's that sellers have to see offers to be able to sell a home, and there are no offers if there's no qualified traffic.

What kind of traffic is good enough? Three showings a week is decent after the initial flurry of a new listing. There will be more visitors to your property in the first week or two, both in regular showings and in open house visitors who are serious about buying. If you are not getting three showings a week (and it's not a major holiday, a heat wave, or something along those lines), you have a problem. There are three most likely culprits to the problem: price, conditon, and marketing.

The feedback from showings and open house visitors is of key importance and will help you and your agent to understand the public's reaction to your price and condition. Agents can ask (without being pushy) questions about how the buyers think or feel about the home.  Or ask their agents. (I use a system called HomeFeedback.com that requests feedback by email with a very short 5 question survey. Normally I get about a 65% response rate from agents.) When most of the consumers or agents tell us "the home is dated" or "it needs too much work", we know it's an issue. Or perhaps the home is turnkey, but is priced 10% too high. Sometimes the condition issue is fixable but sometimes the only way to address it is in lower, more attractive pricing (when huge renovations appear to be necessary or there's a time or money issue for the seller).

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Many Silicon Valley home sellers want to sell their homes As Is. In the case of short sales, it is likely that the sale will be As Is, and with foreclosed or bank-owned properties, you can be fairly sure that it will be an As Is sale.

But what does that mean, exactly?

As Is means that the home will be conveyed to the buyer at the end of the transaction in the same general condition it was in on the day that the buyers wrote the offer. If the roof has leaks, the crawl space is full of termites, and the appliances do not work, that is how it will be on the day escrow closes.

What it does not mean is that the seller can let the property condition deteriorate. The seller must continue to maintain the home and land in the same general condition. So if the lawn was green and well trimmed, the seller cannot suddenly let the grass die and neglect to mow it.  If a baseball breaks a window after the buyer and seller have a ratified contract, the seller must repair it. The condition will not have to be better, but it should not be worse, either, than on the day the buyer and seller agreed on the price and terms of the sale.

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What makes a Silicon Valley house a luxury home? How is high end real estate different from the rest of the market? When is a property not just a home with land, but an estate?

In other parts of the U.S., spending $700,000 will fetch a 4000 square foot home, new construction, in an upscale gated community with country club amenities such as a golf course, tennis courts, and more.  Here, that same $700,000 will procure an entry level single family home in many parts of Santa Clara County.

Luxury connotes a combination of qualities, features, and amenities.  And it includes pricing (relative to the nearby market), condition, land, design.

Pricing Luxury Homes in Silicon Valley: What Do They Cost?

Expensive Silicon Valley homes are not necessarily luxury homes. Depending on the city or town, the price tag could be higher or lower. For instance, a fabulous house on a large lot in Gilroys Eagle Ridge might sell for 1/3 as much as the identical type of home, land and neighborhood found in Saratoga, Monte Sereno, or Los Gatos, if a similar home happened to be available. Generally, though, luxury homes could cost as little as $1,000,000 or so in some parts of Silicon Valley or in neighboring counties, but in most parts of Silicon Valley, a true estate type property will be valued at $2,000,000 or $3,000,000 or more.

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 Natural Hazard Reports are included in the disclosures when homes are bought and sold here in Silicon Valley. Those reports will indicate whether or not the property is located in areas with known natural hazards, including 

• Flood Plains
• Liquifaction Zones
• Earthquake Fault Zones
• Unstable Soils Areas

But wouldnt you like to know where those places are before ever writing an offer?

Many Realtors utilize a tool that combines this natural hazard information with other boundaries that may be of interest to you, such as zip code lines, town boundaries, school district boundaries, district names within San Jose (like Berryessa, Cambrian Park, Evergreen, etc.) and so on. This is the Barclays Locaide and you can buy it online or in Realtor stores in the San Jose area. They arent cheap at just under $60, but they are extremely helpful and worthwhile for having a sense of where the issue areas are in Santa Clara County.

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Homeowner Associations (HOAs) are created to oversee condominium complexes, townhome communities and planned unit developments on behalf of their members. These are non-profit organizations whose purpose is to manage common areas, enforce neighborhood rules and standards, and often, unofficially, to foster community unity too. In most cases, they collect fees from members and have local authority. In other words, if you do not pay your homeowner association dues, or abide by one of its rules*, the HOA can and usually will fine you or even foreclose on you!

There are loads of HOAs in Silicon Valley. As with all organizations, some are better run than others. Its a little different than owning real estate outside of a homeowners association.

What are the pros and cons?

At their best, Silicon Valley HOAs keep the communities they manage beautifully landscaped and maintained, they hire good providers for needed improvements, and minimize risk to all the members. By having reasonable rules and community buy-in, the neighborhood can look inviting and property values can be better maintained.

At their worst, HOAs can be unresponsive to members needs, erratic, arbitrary and irresponsible. They may, by poor planning, cause huge assessments to be necessary. Not only are those an unhappy occassion, they can also make it hard to sell a home with a special assessment looming. Fortunately, this is seldom the case.

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New real estate licensees dont come with a warning label. Theres no magnetic sticker on their cars, like there are with folks doing drivers ed. About half the agents selling real estate in Silicon Valley have been licensed less than five years. And half the licensees sold no homes last year.

How will you know if your potential listing agent or buyers agent is an inexperienced (if well intentioned) newbie? If you ask, will you get a truthful answer? A straight answer? If you ask how long, you may get a vague response like, 'dont ask! or 'seems like forever!

• The California Department of Real Estate Public Licensee Lookup will give you the agents license history. Dont guess how long he or she has been in the business. Find out.
• This, of course, wont tell you how many homes he or she has actually sold. So ask for references and ask to view the homes sold on the web (agents can provide a printout with their names on it which indicate homes where they represented seller, buyer, or both)

Realtors (licensees who are members of the national, state, and local Board of Realtors) promise to abide by a code of ethics. A real estate licencee is not held to the same standard. So please start by making sure that whomever you hire is a Realtor. (Perhaps 1/3 are not.)

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