Some Silicon Valley home buyers do not want to have their own buyers agent, but instead expect that they can find properties in the San Jose area that they want to see and request that the listing agent show it to them in a private appointment.  These same potential buyers may be surprised that the listing agent may refuse to show them the listing outside of a regularly scheduled open house – that is, if the seller is permitting open houses.

What’s going on?

In earlier articles we’ve discussed the need for a buyer broker agreement (verbal at the least, but possibly in writing) and why you, as a buyer, ought to have your own representation at the negotiation table.  (If you missed these, see the links under “related reading” below.)   Today I want to dispel the myth that the listing agent is required to open up and show condos or houses for sale to anyone who calls and requests seeing them and explain why that’s the case.

Showings of homes for sale are determined by the listing agreement or contract between the home seller, the listing agent or Realtor and the broker

The most important thing for buyers to understand is that the accessibility of the home for viewings depends upon the agreement, verbally or in writing, between the owner of the property and the agent/brokerage hired to market, negotiate, and sell the real estate.   It’s not an “on demand” situation where an interested buyer can insist on seeing the property as desired. Here are some of the expected scenarios and reasons why showings are somewhat restricted most of the time:

• Some properties are tenant occupied and it may be the case that you cannot even see the house or condo until after your offer is accepted. Most often it will be challenging to see homes with renters in them, but it is possible, usually, to see them prior to purchasing. (This is less true with duplexes, triplexes and four plexes. Apartment buildings are always sold “subject to inspection”.)
• Other times there may be a restriction such as 24 or 48 hours notice required for showings when homes are owner occupied.
• Most of the time, the seller has requested that any private showings, by appointment, involve ONLY pre-approved buyers. The sellers don’t want to waste their time with tire-kickers.  They want serious buyers.
• Most of the time, a seller will not want the listing agent to also represent the buyer and will expect serious home buyers to have a buyer’s agent.  If you are working with your own agent, that’s who should show the home to you.  If you have your own buyer agent, he or she can see what is involved in showing the property to you by looking at the agent version of the MLS (which includes showing instruction information and restrictions)
• Some sellers want open houses, some don’t.  For those selling a home during the holidays, often the for sale sign and lock box are removed and it becomes harder to get into these properties.
• Safety is a HUGE concern, both for home owners selling on their own and for realty professionals. Each year, Realtors and other real estate professionals are injured or killed in their line of work. If this surprises you, ask yourself how smart is it to meet total strangers at an empty house? It’s not.  If you want the listing agent to show you the house, expect to be asked a lot of questions (are you preapproved? if so, with who? how can we verify that?) and usually expect to meet the agent at the office first. Many Realtors will ask to photo copy your driver’s license prior to taking you to the home – this is for personal safety reasons. We realize that you will feel uncomfortable but please remember that real estate is risky for us and we absolutely must be cautious.

Related reading:

Do You Need a Buyer’s Agent? Or Should You Find a Home, Then Use the Listing Agent?

Silicon Valley Home Buyers: Should You Use a Buyer Broker Agreement?

Early in my career, I had the pleasure of working with a wonderful young woman (let’s call her Ann) who was preparing to buy her first house in San Jose.  Ann was all of about 23 or 24 years old, but she had been saving since she was 16 or 17 years old. So much discipline!  This Silicon Valley native had a clear idea of what she wanted (a house in a good part of Santa Clara County), what she expected (a bigger place that probably would need some work) and her long term goals (get a house and rent bedrooms out to friends and relatives later).

Together, we got her into a 4 bedroom Blossom Valley house with lots of potential.  Ann rented the other 3 rooms out to friends and relatives.  She worked to save the money to buy the property and has labored to make it better over the years.  This was not an impulse buy at all – instead, it was part of a big plan she had since she was a teenager.  I did and do respect her so much: she had a very clear idea both of what she wanted, and what she needed to do to attain it.

How many of us can say the same or have so much discipline and planning?

I have a ton of respect for people who carefully save and plan.  At the other extreme, I worry tremendously about those who make spur of the moment, highly impulsive and seemingly unrealistic decisions.  When or if they ask me for advice, they don’t always like what I have to say, because as a friend or as their Realtor, I need to try to help them to make better decisions.

• Someone I know says that she is writing an offer on a house (not with me, but out of this area) but is about to lose her job.  I suggest that she rethinks this idea and she says that I’m negative and ruining her dreams. I’d like to think that I’m helping her to avoid a credit disaster!
• Another person I know says that he’s going to purchase a house with a friend. It’s a rocky relationship at best and I suggest, since he brought it up, that he rethink the wisdom of this since it’s a surefire way to ruin a friendship and potentially lose the house later too.
• Friends wander out on a sunny day and make an offer on a house because they like the floor plan, but know nothing of the area (which, by the way, is very near a state prison, a major earthquake fault and a freeway). It was their first day house hunting and I wonder why their agent doesn’t try to help them to make the best decision, rather than a fast one….

If you want to buy your first home, slow down, make a plan, check it out with trusted specialists and friends (financial planners, close relatives or friends) and see if it makes sense.

What do you need to buy a house or condo in the San Jose area? There are three main areas you need to address:

• Employment – I know it’s obvious, but you need to be gainfully employed and you need to have a good reason to believe you’ll have that job tomorrow.
• Savings – at a minimum, you need about 5% down (for an FHA loan) or more. More is better: there’s a good chance you will need to make repairs or improvements.  Shoot for 10% to 25% down and you will be the better for it – interest rates are cheaper when you put more down too.
• Clean credit – early on, very very early on, get your credit scores from AnnualCreditReport.com and see if there are any errors or any issues which you can resolve. If your credit stinks, your interest rate will too.

Without all three of these in check you risk paying more in interest rates and worse, you risk ultimately losing your future home.

Wanna be Silicon Valley home buyers: slow down.  Check your credit.  Make a plan.  Save money.  Then proceed.  Don’t try to do it without these three in check,  Without them, it’s a recipe for disaster.

Buying or selling a Silicon Valley home? Be prepared for an onslought of paperwork.  There will be many questions you’ll be required to answer carefully (if selling) or to read and understand thoroughly (if buying) plus many other documents such as  inspections, reports, and boilerplate (templated or generic) disclosures.  Sometimes the language used will be technical or complicated, so you may need to do a little research as you see the questions.  Here’s a list of some of what you’ll be reading or responsible for completing or ordering, not necessarily in this order:

• the purchase agreement, any addenda & contract disclosures (appx 12 -20 pages in most cases)
• a preliminary title report and possibly CC & Rs (Covenants, Conditions and Restrictions)
• if the home is a condo, townhouse or PUD, docs pertaining to the home owner’s association (can run hundreds of pages)
• the standard disclosures common in our area which require the seller to answer questions about the home, yard and area (appx 15-25 pages)
• a natural hazard report (stating whether the home’s in an earthquake zone, flood plain etc.), environmental hazard report (whether there are leaking underground storage tanks and such), tax report (any extra bonds or assessments that will show up on your property tax bill) and other area disclosures ordered by the seller and provided by a company such as JCP, Property ID and other firms (appx 80 pages)
• inspections: usually pest and home are ordered, often also chimney, roof, possibly others such as pool or other specific components of the home (varies but often at least 40 or 50 pages, frequently more)
• for buyers: disclosures on their loan
• for sellers: the listing agreement and disclosures related to it
• at the time of signing the final papers: escrow instructions and lots of forms for transferring title – you will also see the reports seen previously too
• additionally, some real estate brokerages have a lot of their own disclosure forms too
• if the sale is a relocation, there will be a lot of relo papers to complete as well
• if it is a short sale or bank owned home, you will have extra paperwork for that also

By the time it’s all said and done, you will have reviewed several hundred pages of paperwork that are several inches high if stacked. All of this can make consumers a little bit crazy, particularly when there forms which are very nearly duplicates. (It may be a little less if it’s a trustee sale or probate, but only a little less.)

Why is there so much of it?

For the most part, the disclosures, reports and inspections are consumer protection driven.  It is extraordinarily important for home buyers to have a full and complete understanding of what they’re taking on when purchasing a home. 

Disclosures are key: Sellers must provide information on anything which would “materially impact value or desireability“, so have disclosure forms to assist with that goal. These questions are intended to help the sellers to cover areas that might not occur to them without prompting. For example,  some sellers wouldn’t think a death on the property matters, but some buyers would, so there’s a question on one of the forms about that.  (The law in CA is that a death on the property within the last 3 years must be volunteered by the seller without asking by the buyer. They don’t have to offer that information if the death happened more than 3 years ago, but if a buyer asks about it, the seller is obliged to answer truthfully.)

Many of the questions, or nuances within the questions, are the result of a lawsuit at some point.  So to omit some “wiggle room”, the question was added or modified (usually to make it broader).  When you see questions that make you wonder, it’s pretty safe to assume that somewhere along the line, someone sued someone else over that very issue. (For example, “land fill” is now called just “fill” on a question asking about its presence since there was a lawsuit involving a Willow Glen home owner’s use of medical waste products as fill in a back yard. Gross, but true.)

Sellers sometimes do not want to answer the disclosure questions carefully  or truthfully because either they don’t want to spend the time or for fear that it will put off a buyer.  They sometimes think that a problem in the past was remedied so it’s no longer necessary to mention the issue. That’s just not true – the obligation includes explaining past issues that were fixed or repaired.  The #1 cause of real estate lawsuit is non-disclosure by seller to buyer.  The best way to keep the money you make on your home sale is to be very truthful and complete in your disclosure (not under-disclosing a problem).  Plan to spend at least 2 or 3 hours responding thoughtfully to the disclosure questions and trying to recall if there’s anything else not covered in the questions which ought to be disclosed.

Buyers sometimes do not want to be bothered to carefully read and understand the paperwork they were given.  Later, they may insist that they weren’t told about this or that, but a review of the disclosures or inspections may reveal that they were told but either didn’t read it or simply didn’t remember it.  It is very hard to take in and retain everything when buying a house, particularly because there are so many papers to go through.  But the best way to avoid an unpleasant suprise later is to take your time with the purchase paperwork now.  Read it as you get it: do not ignore it and think it’ll be OK to skim it at the last minute. In some cases you may read something that will warrant further inspection, asking the seller more questions or may even make you want to run it by an attorney.  If this happens you’ll need time so it’s imperative to take the info you’re given seriously and address it soon. 

Buyers, this is probably the biggest purchase you will ever make.  It is extremely important to take your time understanding as much as possible with the paperwork.  Sellers, you want to be done when you sell the home and not have a problem arise later due to non-disclosure or under-disclosure.  Be thorough and complete and you will be protecting yourself.

Yesterday some clients of mine asked me about seniors selling their home and purchasing another residence while keeping the older, lower property tax rate. I did a little digging and thought I’d share what I found.

There are actually two propositions involved.  Prop 60 applies to moves within Santa Clara County, and Prop 90 relates to moves between counties which are participating in this benefit to seniors (only these few, as of the date of this posting: Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, Ventura).

Some of the basics:

• Homeowners 55 and older at the time of sale of the original property.
• Homeowner must be on record both for the home that’s sold and the replacement property.
• The replacement residence must be equal to or lesser in value than the original residence.
• There are special rules for multi-family (duplex, triplex, fourplex) properties and for mobile homes.

In the most typical scenario, a senior homeowner would sell a house (or townhome or condo) and “downsize” to another, less expensive, smaller house or condo.  If the homeowner had been in the first property for a very long time, then the low tax rate would be hard to give up, but Props 60 and 90 enable that homeowner to go to another, less expensive home and carry the old tax rate along – one time, and either in the home county or in one of the participating counties. 

I have known seniors to sell a house in Los Gatos, Saratoga or San Jose and move to The Villages or to gated senior communities out of the area but closer to their grown kids and make use of these two propositions.

For more information and to get all the details, please click on the links above.

Something you can count on, when buying a home, is that you will be nervous – at times you will feel very stressed, perhaps even sleepless.  It is an immense move, to buy a home, and a big commitment. In terms of stress, it’s right up there with a new job, marriage, divorce and even death.

What can you do to keep the jitters from getting the best of you? Here are three points to follow

First of all, have a plan (and prioritize). If you have carefully thought out what you want and can afford, then if you actually find it and get into contract, you’re far less likely to be upset!  If you stumble into a home that’s open, fall in love and make a purely emotional decision to write an offer, you’re far more likely to freak out! Make sure that your plan includes doing your financing decisions before you ever go house-hunting.

Second, don’t go it alone, even if you’re buying alone, and have your partner accompany you throughout the homebuying process. Yes, that means joining you when you’re interviewing and hiring your agent and then seeing all the homes which you see.  A sure fire way to get upset and become emotionally undermined is to traipse through and view twenty or thirty homes, choose one, and then show only that one to your friends or relatives. Nine times out of ten, your loved ones will shoot holes in your plans because they won’t have seen all the homes which you rejected – and they won’t appreciate why the one you selected is actually worth buying!  

Third, qualify the advice you’ll accept about your decision to buy (or sell) Silicon Valley real estate. There’s nothing like an uniformed but well intentioned person at work, in your neighborhood, in another state or online to turn a happy homebuyer into a nervous wreck. Sometimes, advice that would be helpful elsewhere doesn’t apply here – please remember that real estate is local!  In other states, often home buyers and home sellers employ a lawyer to review the purchase agreement, but here we only call on attorney if there’s a problem or weird, out-of-the-ordinary situation. Within California, there are some big differences between southern CA and northern CA in terms of where escrow is opened.  There are differences within Santa Clara County as to which purchase agreement form is used. 

If you do these three things, you’re far less likely to have a paralyzing kind of fear overtake you in the middle of your escrow. Yes, you’ll still be nervous (that’s normal), but you won’t get or remain totally freaked out for long in most cases.

Visiting Silicon Valley and San Jose area open homes is a great way to get to know neighborhoods, architectural styles and the market overall. I encourage people thinking of buying or selling to visit the opens nearby to get a pulse on the market and what’s “out there”.  Normally it’s low pressure*.

*In terms of “pressure” at open houses, most Realtors and other realty professionals will let you go through the home at your own pace. Some will require a sign-in (often claiming that the seller requests this, but most often it is so that the agent can follow up with you later).  Once in awhile, though, you may bump into a “quantum” tour situation. With these, the agents are somewhat oppressive and require not only a log in by you but also insist that you only go through the home personally accompanied by one of their sales associates. The reason, of course, is “lead generation & conversion”. They want to increase the chances of getting clients out of the open home. The spin is personal attention.

Of course, the other extreme you may see is not high pressure, but nearly asleep. Some agents (maybe one in 20?) will not get up from the couch or table to even shake your hand and welcome you to the home. Hopefully you don’t run into this much!

A few open house tips, in terms of what to be aware of:

• feel the floor as you walk through the condo or house: is it level?
• smell the various rooms – are there candles or other scents intended to mask odors?
• note the light and time of day, as well as the direction the home and windows face and ask your self if the home gets adequate light for your taste
• is the layout good?
• is there enough storage?
• if there are problems with the home, can they be fixed?
• what needs updating or remodeling, or will need it soon?

The best homes will have presale inspections and disclosures completed which you can view prior to writing an offer.  It can be very helpful to familiarize yourself with the various reports, inspections, and disclosures so that you understand the range of normal. Older homes will not be defect free, and sellers will not make them perfect either – so get a feel for what to expect by perusing some of these if the binders are available during your open house. (Do understand that the agent is likely going to read it as a “buying signal” so explain that you just want to understand how the paperwork looks.)

For more tips on what to include when viewing Santa Clara County homes for sale, please see:
Viewing An Open Houseop  on my main website.