What’s your home buying style?  Impulsive? Cautious? Analytic?  Deep bargain hunter?

A few times in my real estate career, I’ve worked with Silicon Valley home buyers who were so anxious to purchase a home that I was concerned that their impulsivity might be a cause for buyer’s remorse later.  When that happens, I try to slow them down a little – I’ll suggest “let’s look at least a few homes” if it happens that they want to buy the very first home they saw. Part of my fiduciary duty is to look out for my clients’ best interests, and sometimes that means putting the brakes on just a little (or telling them what they don’t want to hear).

More commonly, it’s the other extreme that I see in our very well educated, extremely analytic population: paralysis by analysis or an overabundance of caution. (Sometimes it’s overabundance of bargain hunting.)

The vast majority of successful Silicon Valley home buyers are somewhere in between: they set up their priorities and goals (“I want to buy in the next 4 months at this price with this location or school and this type of property and size of home”). The clearer they are on their goals, wants and needs, the easier it is to help them get it – as long as they have realistic expections. That is key!

Once – only once – I sold a Los Gatos house in which the husband purchased without the wife’s physically seeing it.  This is rare!  They had moved so many times that he understood precisely what mattered to her, and if the house met that list, he was good to go.

The national average for the number of homes seen before buying is about 10, but it is more than that here in my experience.  If buyers know what they can afford and what they want, often they and I can narrow what’s seen online to 10-20 homes we visit in person and from those, one or two should be a best fit.  For highly motivated, determined, realistic and organized buyers, and this can usually happen in 2-3 weeks.  (If you are selling one house and immediately buying another, this is really the only way you can swing it without having to rent in the interim.)

What are the odds of successfully buying a Silicon Valley home this year?

How likely is someone to buy a house or condo?  It varies, of course.  As a Realtor who is not in it for one transaction but instead for a long term relationship, I want to help consumers to make good choices.  It is usually easier to slow down the impulsive home buyer (note: not all real estate licensees will do this, some just want to make a quick sale) and harder to move someone who’s bogged down by unrealistic expectations or exaggerated fears to the middle zone where they are able to write a successful purchase offer on a home.

Most of the time, capable buyers who don’t write the offer after months of looking are either overly cautious (afraid of overpaying, usually) and unrealistic about market values (often wanting something for 10-20% than it’s worth in the current market), although sometimes it’s another issue entirely, such as husband and wife not agreeing on either the priorities or the budget.

If you’ve been looking at homes for more than a couple of months, or have seen more than 20 homes and not found yourself able to write a purchase contract with your Realtor, it’s time to evaluate the process and what the stumbling blocks might be.  Are you hoping to find a perfect house at a perfect price in the perfect location?

Waiting for perfect….

This situation of “waiting for the right house to come on the market” is not so unlike the seller of the overpriced house waiting for “the right buyer to come along”.  If all of the other home buyers have seen and rejected that listing, it’s not very likely that another home buyer will come along and decide it’s just perfect or that the price is right.  We speak of the “probable buyer’s value” and try to determine what the odds are that a buyer will pay what the seller expects. For a sale to happen, the buyer and seller expectations have to line up.  So too for home buyers – if you have seen everything over many months, it is extremely unlikely that any new listings will fill the bill any better.

How your Realtor can help

If you find yourself unsuccessful in home buying and it’s been a few months, and you’ve seen plenty of properties, talk with your Realtor.  It is very difficult to be objective about oneself  and where one might be on the spectrum.  If you’ve hired a good real estate agent or Realtor whom you trust and who is presenting you with homes to see that match your basic list, ask him or her what the issue seems to be and what needs to happen for you to be a successful home buyer.  Please be open to hearing what your realty professional has to say and suggestions being made.

Over the last few years, I’ve helped many San Jose area renters to become home buyers.  Sometimes they did have to write a few contracts before being able to buy (if there were multiple offers it can be very challenging!).  Sometimes they had to change their expectations, order of priorities, location or budget for it to work for them.

If you really want to buy – and not just look – now’s a great time. Interest rates are fantastic. In many areas of Santa Clara County it’s a buyer’s market.  If you can line up your expectations with the market realities of today, you can be a homeowner too.

For further reading:

How To Increase The Odds That Your Purchase Offer Will Be Rejected

Home buying

The post below was published in November of 2009. For a more current look at the Monte Sereno real estate market, please see:

The Monte Sereno Real Estate Market

The Monte Sereno real estate market is trickier than most Silicon Valley markets to gauge because it’s so tiny.  With just four thousand residents, there simply aren’t that many homes for sale in Monte Sereno at any given time and there are even fewer solds.

Monte Sereno Real Estate Trends at a Glance

The info below is from my Silicon Valley REReport, which comes out monthly. Click on the link to see the full report on October’s home sales activity in Monte Sereno.

Home Values in Monte Sereno

Sellers often want to know, perhaps more than anything, what is happening to home values. “What’s my house worth?” is a perennial question because the answer can change from month to month.  Buyers want to know what any particular property should be worth – and often do not see eye to eye with sellers on this point.  Hence, few homes go into escrow (or under contract) each month. (The months supply of inventory has averaged 19 months in MS this year – more on that below – which indicates that there’s a bit of a standoff between buyers and sellers. Buyers aren’t buying in the vast majority of cases.)

Valuation is difficult to pinpoint if we only look at the closed sales of homes in Monte Sereno because there are not a lot of them.  The number of closed sales per month in 2009 has ranged from one to five, the average is 2.3.  In October there was only one sale. So when preparing a competitive market analysis for potential clients, I would consider a both list prices and sold prices in Monte Sereno as well as broader base of information, including what’s happening in Los Gatos in the part where homes have the same school district (and adjusting up a bit since Monte Sereno homes sell for a little more than Los Gatos homes do).  I might also have a look at the Saratoga market, since there’s a possible overlap there (buyers looking at Saratoga may also consider Monte Sereno). If you just look at the average data for a particular month and in that month just one home sold & closed escrow, your understanding of the market may be seriously off base. More info is needed.

So, too, in terms of understanding the speed with which a home might sell or any other question pertaining to listing and selling a home – it’s a good idea to also see what’s happening in neighboring Los Gatos and Saratoga.

In this post, then, we’ll consider what’s happening in Monte Sereno specifically (with both listed and sold data) but also cast a wider view into Los Gatos (95030) and Saratoga (95070) since these two markets are similar in terms of location, pricing and schools and tend to appeal to the same buyer pool, generally.  A Monte Sereno home for sale is likely competing with homes in the same school district in Los Gatos and possibly also homes in Saratoga.

(1) List prices of Monte Sereno Homes for Sale

Below please see an Altos Chart (used with permission – I have a subscription) displaying the median list price of homes for sale in Monte Sereno, all prices combined. (Altos uses list price data, not sold price.)

It is interesting to see the low point was in May or June.  In less expensive markets like Cambrian Park, that low point was in about February or March of this year.  The high end markets have been slower to feel the impact of the market decline, so the ripples are all a bit after the more affordable areas.

Next, see the median list price broken down by quartile:

It is interesting to note that the higher priced homes seem to be rising which the least expensive homes have fallen in terms of list price.  This is contrary to what is happening in “starter home” neighborhoods.

To get some grounding with a larger pool, here’s the Monte Sereno median list price as compared to the median list price of Los Gatos in the 95030 zip code (which is almost exclusively in the same school district) and also Saratoga (which has several school districts).

The market’s been a lot tougher in Los Gatos than in either Monte Sereno or Saratoga!  Saratoga is beyond the bargain pricing of a few months ago – homebuyers interested in Saratoga have found that out first hand.

(2) What about the data for sold homes in Monte Sereno?

For this I went to our MLS provider, MLSListings.com and ran the statistics myself.  Here’s a summary of the year to date listing and sales information for Monte Sereno, January through October 2009.

As you can see, there ae very few closed sales each month, which is why it’s important to always view both neighboring communities and the activity with list prices.

Of the 25 solds in Monte Sereno so far in 2009, the range has been from $845,000 to $4,250,000, with the majority of homes selling between 1 and 2 million dollars.  Here’s the breakdown:

Under $1 million: 3
Between $1 and $2 million: 14
Between $2 and $3 million: 4
Between $3 and $4 million: 2
Between $4 and $2.25 million: 2

Of the 25 sold and closed homes in Monte Sereno, two were banked owned properties (REOs). None were short sales.

There are three pending sales in Monte Sereno as of right now, with the appx list prices of $1.8 mil, $2.4 mil and $8 mil (the biggest sale in MS in a very long time).

Back to the question of home values: have homes gotten less expensive for buyers in Monte Sereno? Are sellers getting less money for their houses then they did a year ago.

Yes.

On our MLS, I ran the sold houses in Monte Sereno which closed from the first of the year through the 12th of November both for 2008 and 2009 in which the closed sales price was between $1 million and $2 million (since that’s where most of the homes are selling and it is a large group, less susceptible to swings in pricing from an oddly high sale now and then).

In 2008, the average sales price for this range was $1,641 with an average home square footage of c. 2490 (2489.73 if you’re splitting hairs). Price per SF =$659.11

In 2009, the average sales price for this range was $1,625,829.07 with an average SF of c. 2677 (2676.64). Price per SF = $607.41.

Buyers are paying an average of $51.70 per SF now as compared a year ago, which is 7-8% less.  Given that some areas are seeing cataclysmic price drops, this is not a huge adjustment, but it is significant.  If you are trying to sell your Monte Sereno home based on last year’s home values, you may be off by 5 – 10% (allowing for a margin of error). To get your home into the small percentage which is selling, it’s important to price correctly (and most Realtors will tell you that the number one problem causing homes to remain unsold is not marketing, but above-market pricing…the best marketing in the world cannot help on overpriced home to sell).

Buyers, find your desired home and make a reasonable offer based on current market conditions.  If the home is owned by must-sell (rather than “will sell if I get my price”) sellers, you may find that your offer is accepted or at least countered into a reasonable range.  Though most homes sell fairly close to list price, they don’t all. And remember, an offer is just an invitation to do business, and you won’t be able to buy if you never write the offer.

(3) Competition, Inventory and Sales of Homes in Monte Sereno

Throughout 2009, there have been anywhere from 22 to 34 Monte Sereno homes for sale (active, available) at any given time – the average for 2009 so far is 28.5. The “months supply of inventory” for Monte Sereno as a whole has varied in 2009 from a low of 5 months to a high of 36, the average being 19 months supply.  But some homes are selling, some of them quickly.  In October, the one home that did close escrow had sold in just 9 days.  The good homes tend to sell quickly, which is a joy for ready sellers but not so good news for slow buyers.  Each home is unique, so don’t assume that your desired home will be on the market for four months due to a misunderstanding of the average days on market data – it may or may not linger while you decide!

Inventory is down in Monte Sereno, as it is in much of Santa Clara County.  Would-be homebuyers lament, “there’s nothing on the market”.

A comparison of Monte Sereno inventory with Los Gatos, 95030 and Saratoga, CA (95070):

Again, Saratoga’s inventory has really fallen compared to the others.  It has risen in Los Gatos, which has the worst market for sellers of the three areas. Monte sereno has stayed relatively constant in terms of inventory.

As of this moment, there are 19 homes listed for sale and actively available in Monte Sereno. These properties vary tremendously in house size, acreage, and quality – ranging from modest ranch homes to equisite estates and luxury properties.  The “averages” of these houses: 251 days on the market, 4198 SF, 1 acre lot, list price $3,060,726.  Viewing just the $1 – $2 million range, there are 6 Monte Sereno homes for sale, and the averages are: 152 DOM, 2882 SF, appx half acre, list price $632.54 SF and list price $1,670,633.  These prices are close to the sold data from earlier this year ($607 per SF sold price was $635/SF list price).  But with 152 days on the market on average, that means that some or most of these homes aren’t keeping current with market trends (or possibly other problems such as too many showing restrictions, not enough photos on the MLS, a discouragingly low commission rate to buyer’s agent or a host of other potential issues – but usually it’s about the price).

(4) Monte Sereno Homes: Days on the Market

Some properties were expired listings and then relisted with other agents, with a new marketing plan and new price, but may still reflect the entire listing history (this is the case with my sold listing on Francesca Court earlier this year – I got it sold in 18 days but the MLS shows it as 244 days since it was on the market with another agent before I was hired).  The official DOM is often not a good indicator for this reason.  When homes are well priced, in good shape and well marketed they often sell within a month in most price ranges and areas within Monte Sereno.

Disclaimers aside, here’s the chart for the average days on market for all quartiles combined in MS:

And broken down by price quartile – as you can see, there’s quite a bit of variation as the market is not a unified block, but is stratified:

The highest priced homes fared badly in summer but are selling amazingly well, while the lower-middle quartile has suffered the worst.

Combined Monte Sereno, Los Gatos 95030 and Saratoga 95070:

Monte Sereno has far longer days on market than the two competitors of these three high end markets.  What gives?  It may be about the schools – Monte Sereno has Los Gatos Schools, which are very good but not as highly rated as Saratoga Schools, but MS sells for more than the same home in Los Gatos with the same schools. There’s a lot of competition for homes in Saratoga with either Saratoga or Cupertino (but not Campbell, so much) schools. Then again, it may be skewed because of the very small amount of data – “statistically insignificant” – unless your home is the one that’s not selling.

Want or need to sell your home? Look hard at the current competition and realize that maybe 10 or 20% of all homes will sell at best this month. What needs to happen to get your home into the pending sales group?  Ask your agent and then be open to the truth. Sometimes clients don’t want to hear something unpleasant.  I once had a potential client tell me, “this is what I want to list the home for, and I want to hear your enthusiasm for my price!”  It was an invitation to lie, which I won’t – and didn’t – do.  Agents don’t control the market.  If there are “better deals” than your home, then those will be the homes that sell.

Sometimes offering great terms can help improve your price. Like what? Terms such as carrying back all or part of the mortgage.  This does entail risk so be very careful here, but given that jumbo financing is hard to come by now, this might be exactly the way to proceed if you do not need cash out of your home immediately.  Also a possibility is a lease-to-own option. Go over these and other “terms” with your Realtor to see what you can do to maximize your net in today’s market.

Interested in buying a Monte Sereno (or nearby) home? Please contact me today!

If you’d like to speak with me about selling your home, I’d be glad to do a no obligation initial consultation, and provide you a copy of my book at the same time, “Get The Best Deal When Selling Your Home In Silicon Valley“.

More information online:

More links on home selling – on popehandy.com
More links on home buying – on popehandy.com