Should you market your home for sale through the holidays?  It’s now mid November, and if your property has been listed for sale but not gotten an acceptable purchase offer, you may be thinking of taking your house or condo off the market until sometime in the new year. Is that a good idea?  Below, please find some considerations for you as you decide what to do. We’ll

Pricing: will the home sell for more now, or in the new year or spring?

No one can tell you whether prices will be better or worse in the first quarter of 2012 than they are now.  I just returned from the annual conference for the National Association of Realtors (of which I am a member), and quite honestly, I got conflicting information.  Some reports indicate that prices will be lower in the spring, others that they will be higher – or interest rates may be higher, which puts pressure on pricing since affordability is strained when that happens.   Pricing is local, though – so no matter what’s happening nationwide, it could be different in Silicon Valley, in Almaden, Cambrian, or Los Gatos, or in your subdivision or school area.  But bottom line: we really don’t know what pricing will do, we only know the probable buyer’s value – a range of likely sales prices – right now.

Being disturbed during the holidays

Many home owners really don’t want a lot of traffic coming through the home from Thanksgiving through the New Year due to visiting relatives, events planned such as parties at the home, the presence of gifts and concerns over theft, etc.  They may also be worried about rainy weather and carpets getting soiled.

At the same time, though, during the holidays many of us make our homes warm, bright and inviting, particularly if we decorate for Christmas, Thanksgiving, Hanukkah, etc.  Even the smells can do wonders: gingerbread cookies, Christmas trees, hot mulled wine…. With family and friends coming to visit, we tend to “deck the halls” and make our houses really feel like homes.  For many condos, townhouses and houses, during the holidays these homes really show at their best.

The potential to sell a home in December is actually a lot higher both because of the decor and ambiance, but also because so much of the competition is withdrawn from the market.  The odds shift much more in your favor if you keep your home on the market!

Market the home – but differently!

A great solution is to continue to market the home for sale, but to do it differently:

• remove the for sale sign & outside flyer box
• remove the lock box, showings by appointment only (by agent or seller)
• remove the seller’s phone number from the MLS – all appointments will be by appointment only
• flyer stand, disclosure binder and other marketing materials out of sight
• keep home listed for sale on MLSListings.com but more restricted hours

This sort of marketing will result in fewer showings but showings of more qualified, more motivated buyers.  It will be less intrusive to you and everyone in your household too.

Selling your Silicon Valley home? The common wisdom is to interview at least 3-4 real estate agents, ideally from as many brokerages,  before selecting one to work with you on the listing, marketing, sale and escrow of your home.  Many Silicon Valley home sellers don’t do that, though – in fact about half hire the first person they speak with – for better or worse.

But let’s say you’re doing your “due diligence”  and have interviewed a few agents.   How do you dismiss the ones you aren’t hiring?  Today I want to present a few thoughts and ideas on this for you, and I’ll keep it brief.

1. On the off-chance that your property doesn’t sell with the agent you are now selecting, you want to keep the door open for future business with the other agents whom  you’re not hiring now.  In other words, if the agent you hire today ends up being a dud, you do want to be on good enough terms that you can go back to one of the agents you’re rejecting today to hire later. So # 1, be polite and friendly with every agent, even the ones you aren’t going to employ.
2. Additionally, many of the agents you are now dismissing may later have a buyer who’s perfect for your home later. So again, be polite and friendly with every agent.
3. Please remember that for Realtors and other real estate professionals, each listing presentation or buyer presentation is really a job interview.  Just as you would be waiting anxiously to hear back if you’re going to be hired for a position, so do they wait for news to learn if they are employed or not!
4. It is important for agents to know what you’ve decided, even if they don’t get the job.  If they’ve done a good job, but you’re selecting someone else anyway, do tell them that you appreciate their hard work but are hiring someone else at this time. Sometimes it is really difficult to choose whom to hire if you meet a few stellar agents.   The worst thing is for them to not hear back from you at all, or led to believe that you’re going to hire them, only to have someone else’s sign show up in the front yard.  Almost every agent I know has had this happen and it’s one of the low points of being in real estate when it does happen.

Agents often spend many hours preparing to meet with potential seller clients, studying the market, pulling comps, and gathering presentation materials as well as listing papers, most likely, in case you want to sign with them when they arrive. (One of the worst things an agent can do is to show up at a listing presentation and not be prepared to sign a listing if the clients want to do so – and that does happen at times!) Whether you decide to hire them or not, it’s best for them – and for you – to communicate nicely and clearly what your decision is.

Related Reading:

What do Silicon Valley Real Estate Agents Do?

Selling Your Home in Silicon Valley

What happens if your home does not sell within a few months and you take it off the market? If your property status is changed to a cancelled, expired or withdrawn listing, it may be viewed by real estate agents as their potential business, and you may begin to hear from them  – a lot!

What is the difference between expired, cancelled and withdrawn listings?

Let us begin by discussing the difference between cancelled, expired, and withdrawn listings and how each impacts your vulnerability to being swamped with messages from real estate agents.

1. A withdrawn listing means that the property is still listed for sale with a real estate agent or broker but is no longer listed on the multiple listing service (MLS).  It’s still a valid listing and other agents should not approach you about working with them since you are still in a contract to sell your home with your current agent.
2. An expired listing means that the contract for your listing has come to an end and the listing is no longer in place.  Other agents may approach you since there is no valid listing in place.
3. A cancelled listing is one in which the seller and agent or broker agree to terminate the listing. Since the listing has ended, other agents are free to contact you.

In a nutshell, if your Silicon Valley home’s listing becomes either cancelled or expired, real estate sales people may contact you, but if it is merely withdrawn, they are not supposed to reach out to you because you still have a valid listing in place.

My agent removed my phone number before changing the status, but agents still call. What gives?

If you and your agent terminate the listing on good terms, and perhaps even if that isn’t the case, he or she will likely do you the courtesy of removing your phone number to cut down on the barrage of phone calls you will get from agents “working the expireds“, as it’s called.  This helps, but many salespeople routinely download listing information from our MLS so that they have the old info in case anything helpful to them is removed – such as your phone number.  Unfortunately, if your number is ever listed, it’s likely that someone may have it and try to contact you later if your home does not sell.

It’s not just phone calls when your property goes off market

Many of the agents who are “working expired listings” won’t just phone you, but will mail you stuff or even drop by in person (dropping by is called a “pop by” in Realtor circles).  It is unlikely that any of them will have your email address, though, so there’s a small silver lining!

How long does all of this last?

Usually the worst of it is the first week or two and then it begins to taper.   Some sales people, though, only begin at 2 weeks because they want to miss the avalanche of activity (and your likely irritation at it).  Of those late bloomers, some will literally mail you or phone you only once.  Most realty professionals who regularly list previously expired listings and make that a significant portion of their business plan will attempt to reach you many, many times over a month or two, maybe longer.

Drip campaigns and off market homes

The agents who seriously focus on getting the expired or cancelled listing business will most likely try to connect with you by doing all three: phoning, mailing goods (or drop them off or have them delivered) and also stop by.  Real estate trainers teach them that most prospects say “no” four or five times before they say “yes”, so for these highly determined business people, each no means that they should be closer to a yes.

At what point do they quit?  Perhaps after 6 – 8 attempts over a 4 – 8 week time frame.  They will have a marketing plan that includes drip mailing programs, calls and visits in the hopes that their persistence will indicate to you their overall professional determination.  (“If he’s working this hard to list my house, he’ll probably work just as hard to sell it” is the message they hope to convey.)

How can I make the calls, mail and visits from all of these agents stop?

The clearest cut way to make them stop is to list your property for sale (either with your previous agent or a new one of your choosing).  Agents absolutely cannot (should not) contact you if your home is listed for sale with another broker or agent.  Along these lines, rather than have your listing expire or be cancelled, you can make the status “withdrawn” instead – leaving it listed but currently unavailable and not on the multiple listing.

Short of having it listed, you can simply let all calls roll to voice mail and delete them once you know it’s an agent calling; you can leave a message on your VM that you don’t want any agent contacts also.  You can keep a log of everyone who contacts you, and how, and ask each one to not do it again.  They are supposed to respect your wishes if you ask them to not call, drop by or mail you things.  (You can not answer your door and leave a note up that you do not want to be contacted by any real estate sales people t0o.)

Most of the time, the agents who try to get ahold of you will be polite and well intended.  They should not call before 8am or after 9pm.

Best of all, it’s temporary.  They’ll stop trying within a few weeks in 99% of the cases.

Selling your Silicon Valley home this summer? Don’t make the two most common mistakes which cost sellers money when marketing their home in the hottest months of the year!

#1 Common Home Selling Mistake in Summer: a “closed up” house

So many sellers try to beat the heat by closing up the house, turning off all lights and shutting all blinds during the hottest part of the day.  I see this all the time in summer, particularly if the San Jose area is enduring a horrendous heat wave.  But walking into a darkened house, condo or townhouse is a huge turn-off for home buyers.   It’s depressing.  Yes, we can turn on lights and open blinds, but the initial impression is terrible.

If you have air conditioning, turn it on and expect that the costs of keeping your home cool are a marketing item.  A hot, dark house (or even a cool, dark one) is not inviting.

What if you do not have air conditioning?  If I had to pick between cooler and dark vs hotter and bright, I’d go with hotter and bright.

#2 Common Home Selling Mistake in Summer: allowing the flowers, plants and lawn to wither and wilt

When the heat approaches triple digits, it can be hard to keep plant life, bushes, lawns and flowers in good shape.  Dead flowers in the house, or annuals that have lost their zip are not welcoming.    It’s important to water them (best time is early morning), and if necessary, replace annuals.

Most home sellers in Santa Clara County make a big initial “push” to get their property ready for the real estate market, and after it’s on the MLS, they want to coast and just “keep it clean”.  But if the Santa Clara Valley gets a terrible week of high temps, the fruit can fall from the trees (and rot), the annuals can die and the lawn can dry out.  It takes more effort to keep everything model perfect, but the good news is this: any home buyer who’s looking in 100 degree temps is serious!  (Same is true of buyers looking in the wet months of December and January.)

Remember, you only get one chance to make a great first impression!

Yesterday I got a phone call from a woman looking to find a lease option to buy property in the San Jose area.  “I’m tired of wasting money on the rent”, she explained.  Hoping to locate one, she was phoning the agents of San Jose houses for sale – maybe one of them would do a lease option?  Not likely.

Why are lease options hard to find in Silicon Valley?

It is a challenge to find a lease option in the greater San Jose area for a number of reasons, most of them related to the extra risks involved as opposed to simply renting or selling the real estate outright.

1 – Cash needed at close of escrow: An overwhelming majority of the home sellers here want their cash at close of escrow, so the buyers can be all cash or part cash and part loan (20% down, for instance).  Most real estate sellers want to take the cash from the property being sold and do something with it immediately – and the majority of the time that means putting it into another home in which to live.

2 – Don’t want to be a landlord: Doing a lease option means that not only will the owners of the property not get their cash right away, but they also have to become landlords in the meantime.  If they pay a professional property manager, that may cost 8% per month in overhead, too, so it cuts into any profit.

3 – Lease options are risky: With lease options, there is far more risk for the seller, of course, but also for the buyer!  (And by extension, real estate licensees who get involved with lease options.)

• The seller risks a default by the buyer/tenant and then having to go through the trouble of evicting him/her/them.
• Pricing risks for both seller and buyer:  the purchase price is decided upfront, but the sale isn’t finalized for a year or more.  During that time, the real estate market could appreciate like crazy (leaving the seller to feel that the house is sold for too little, less than market value) or the prices could fall (with the buyer unable to complete the sale since the property wouldn’t appraise – thus losing all of the downpayment in the process).  Either way, buyer or seller could feel unhappy and cheated.
• Bad pricing could lead to a lawsuit:  Those who feel unfairly treated sometimes bring lawsuits – which are scary and expensive.

4 – Lease options are not very affordable for most consumers. Lease options cost more, per month, than a regular rental.  For those who want to rent, they need affordability!  Very few want to pay more than the rental market value for a home, especially knowing that the overage is going toward a down payment.

Who are the most likely property owners to offer a lease option?

The odds are better that a lease option will be available from a non-owner occupied home, that is, investment property.  The lease option is possibly a way for a seller to get a good return on the investment (rental property).  The seller must be willing to not get the cash immediately, though – and most won’t fall into that category.

Buying and renting homes in Santa Clara County are both pretty straight forward.  Rent-to-buy, or lease options, though, are a bit murky.  While they may work easily for some, that’s not always the case.  So real estate firms, which tend to be risk adverse, prefer to avoid them.  Most would suggest that home buyers interested in lease options consider the possibility of purchasing a home with the backing of FHA financing instead, which enables a fairly small cash down payment to be used.

A couple of days ago, I showed a home for sale along the Los Gatos border with Cambrian Park (area of San Jose) to a buyer couple.  It’s tenant occupied, was pretty much a mess  (and on top of being in disarray was dark – curains drawn, no lights on etc.) and the person who lived there walked us through the property, telling us things about the owners and the situation that really didn’t make my buyers want to purchase the home at all.  Between the condition of the property and the info-packed narrative, my clients could not wait to leave.   No sale!

If you own income property (or rental property) in Silicon Valley and want to sell it, you may be aware that a 1031 tax deferred exchange is something to consider.  What you may not remember to do is to strategize about what to do with your tenants.  How do you get them to be cooperative, responsive to showing requests and neat? And preferably, to be absent or at least quiet and out of the way when the home is shown?

When residential real estate is for sale, the occupants’ lives are turned upside down.  It’s no small amount of inconvenience and risk to them with the traffic in and out, the calls at all hours, the loss of privacy and on top of everything else, the risk of personal propertybeing stolen.  If you are a homeowner, you are motivated because you will get cash out of the deal at close of escrow.  If you are a renter and the home you’re renting or leasing suddenly goes on the market, there’s not really a “silver lining” built into the scenario most of the time.  That can set the stage for trouble and even financial loss.

And even if the tenants mean well, many not have been coached as to how to help the home to be sold – or if coached, may not feel terribly motivated to follow through.  Most tenants mean well.  In the extreme, though, some tenants are somewhat hostile.  In worst-case scenarios tenants may do any of these things – all of which I have experienced personally:

• refuse to allow reasonable showings
• make the house unpresentable or unpleasant (trash on the floor, curtains all closed, lights out, music loud, cigarette smoke, bad odors)
• remove the for sale sign or flyers
• set the appointment to show the home, then not allow buyers and agents in to see it
• follow or accompany agents & buyers through the home for every second, talking about the problems of the house or the owners… or smoking while accompanying the visitors, making the showing extremely unpleasant
• Be in bed or have some of the tenants be in bed during showings (even if it’s 2pm)
• Make sure that the home is over-crowded during showings – actually invite people over so that the home is packed

The law in California says that if you are going to put your property on the market, the tenants must be given 48 hours’ notice prior to showings.  Making your home available to be seen with that kind of planning required will kill traffic, and without good traffic, you will not get top dollar for your home.  How much will it cost you to have such restricted showing conditions? Possibly as much as 3 – 5% of the home’s value.  That is a LOT of money.

There is a better solution: make it a win-win situation. Make sure the tenants buy in to the sale.  To glean your tenants’ cooperation (showings with less notice, keeping the house clean etc.), you need to make it a benefit to them to show and help to sell your home.  Here are some things to consider doing:

• Pay for a professional house cleaning just before the home goes on the market and is photographed for the MLS & other marketing
• Give a reduction in rent while the home is on the market as long as the home sells within 2 – 3  months or so
• Offer a move-out bonus at the end of escrow for the renters to be gone on time (preferably prior to close of escrow)
• Have time available for a reasonable showing schedule such as 10am to 7pm only M – W- F and S/S (or noon to 6pm etc.) but do have it somewhat restricted to protect your tenants
• On the for-sale sign, include a rider that says “Do Not Disturb Occupants: Appointment Only” to prevent lookey-loos from knocking on the door, walking into the backyard or peering into the windows

You can negotiate these things and in turn ask your tenants to allow showings with just a couple of hours’ notice rather than 2 days’ notice, to keep the home tidy and bright and to be quiet and out of the way during showings. You can and should explain to them to allow people in and then stay out of their way as they look through the home – if it’s nice weather, the occupants could sit on the back patio, or perhaps in one room of the home if they must be there for the showing.  Better is if they aren’t home at all.  Buyers linger longer when they feel that they are not intruding, so having people home at all will encourage the visit to be short, which will diminish your odds of selling.

It will be a smoother time for you and them, and more profitable for you in the long run, to make it a win for both them and you to get the home sold quickly and to have showings be similar to owner occupied homes.

Alternatively, you could give your clients’ notice to move out and then sell it empty, but often vacant homes don’t sell as well as occupied ones, so if you did that, most Realtors would then suggest that you have the property furnished and staged.  That costs money!  So the best scenario is often to have the home be occupied, but clean and accessible by cooperative, happy tenants who aren’t trying to undermine your sale.  If your tenants are happy with the courtesies you are extending and the financial benefits to them for being cooperative, you are far more likely to experience the win-win situation which leaves everyone better off and will get you, the seller, top dollar.

Buying and selling homes is stressful no matter who you are or what the occasion may be.  It is even more difficult for those for whom English is not their native language and for whom the US is not their native land.

First there’s a language challenge (depending on English fluency).  Even more, there’s a cultural challenge in terms of how homes are bought and sold. Add the normal stress to the cross-cultural confusion and there’s a recipe for misunderstanding, bafflement, surprises and upset.  One of the biggest areas for clashes is how negotiations are carried out.

I have had the pleasure of traveling to many places around the globe and to live in Italy for the better part of a year while in college (in Florence, and yes, I loved it).  I remember very vividly some of my own cultural frustrations and although I was fairly fluent, missing a whole lot of social cues. I had to work to learn to negotiate for simple things like fruit and sweaters in the open air markets.  And I was just 20, not trying to purchase anything as significant as a house or condo.

My clients today come from all over. Typically, at any given time, more than half of my clients are foreign* (and I love working with them and hearing about their experiences, customs and traditions).  Every once in awhile,  we discover that buying and selling expectations are vastly different from Silicon Valley to wherever they came from. Here are a few:

1. Expecting to negotiate at every turn, starting from the time the seller accepts the buyer’s offer and continuing until close of escrow (not done here: you negotiate at most two times – first when writing and countering offers and second prior to removing contingencies, if something new is learned during the course of the inspections.  If you negotiate at every opportunity, you will have everyone angry at you!)
2. Not wanting to negotiate at all (we do not negotiate in the US as much as is done in Europe, China and other places, but we do negotiate some for homes and cars – in some countries there’s even less negotiating than here, but if you don’t try to negotiate a little you will probably leave money on the table)
3. Not understanding the business boundaries (this can be the buyer/seller or one of their close relatives – when and how much to call or even whom to call or not – I once had the parent of a client call me and insist that I “make” his adult child buy a house!)
4. Loyalty to one’s agent is expected here – some buyers may not understand the fiduciary relationship to the agent and don’t hire carefully, instead preferring to always work with the listing agent (thinking it will create a more favorable position).  Others will work with an agent for a year and then, when they are truly ready to buy or sell, drop the agent who has done so much for them and hire someone else (who can swoop in and make money fast).  They may find themselves in the awkward position of suddenly having the overlapping help of several agents who will be upset with their disloyalty and feeling hurt that their effort, time and attention are dismissed at the point of actually buying or selling. (Here, it’s expected that you hire one agent and work only with her or him and if you switch agents you have a good reason & communicate it clearly.) For us, this behavior is unconscionable but for some non Americans. it’s “just business”.

So I wanted to make a quick suggestion for non-native real estate consumers: when buying or selling real estate here, it’s really best to hire a great agent (do not work with more than one at once),  develop a relationship with him or her, and allow yourself to be guided by  your trusted Realtor (with your input and wishes pre-eminent, of course).  Your agent can help you to understand the home buying and home selling process here so that you don’t end up both frustrated and the target of anger.

It’s a bit like being a contractor or the conductor of an orchestra, this business of buying and selling a home.  There is so much to be understood and coordinated, and so many subtle things which you may not understand if left on your own, that you are at a real disadvantage if you try to “go it alone“.  Hire well and then ask about the process and expectations and learn how buying and selling is done locally.

*Here’s a partial list of where some of my non-US clients, past and present, have been from or now live: Canada, England, France, Finland, Russia, Ireland, Denmark, Japan, China, Korea, Viet Nam, Australia, Israel, India, Mexico (I am sure that I am forgetting some!)

Perhaps one of the most important concepts that Silicon Valley home buyers need to appreciate is that someday, they’re going to be Silicon Valley home sellers.

It is true that there’s no such thing as a “perfect house” anywhere in Silicon Valley. No matter what your budget, there is always a change you might want in any home. (Often buyers want about 20% more than their budget allows, in my experience. This is equally true of first time homebuyers as it is for move up or even luxury home buyers.)

So it comes down to which compromises you’re willing to make. There will always be compromises – but which ones are acceptable, and which ones aren’t?

It is extremely helpful if you can prioritize, in order, what you must have or strongly prefer to have, in your next home. Sometimes couples have some, but not all, of the same preferences, wants and needs. Where they get into trouble in homebuying is when they have different priorities. In fact, that can make it almost impossible to buy a home and have everyone happy at the end.

I would like to suggest that one of your top priorities ought to be “resale value” and “resale ability”. Some may object, “I am never going to sell this home!” but in truth, we don’t know the future. If you buy a home with a problem that makes it hard to sell generally, and you get stuck having to sell it in a bad market, it will be brutal and possibly even risky if you later are selling due to any financial hardship.

What kinds of things should you consider as factoring into resale value later?

The biggest challenges anywhere in the San Jose, Los Gatos or Saratoga area are the things you cannot change. For the most part, anything inside of your home can be upgraded, fixed, or remodeled. But you can’t improve the neighborhood, the land the home’s sitting on, or issues beyond your own property line.

Some “big issues” along these lines include:

• high voltage power lines
• train tracks
• freeway walls
• busy roads
• commercial properties too close
• airport too close
• traffic cutting through your street (for schools, freeway access etc.)
• having lesser quality homes nearby (apartments or neglected homes)
• blighted homes, neighbors who do not keep up their yards
• too many cars or other vehicles on the street
• loud neighbors
• an earthquake fault
• being in a flood plain that requires flood insurance
• other natural or environmental hazards such as asbestos, radon, and mercury

For the most part, there is absolutely nothing you can do about any of these problems. If you purchase a home with one of these issues, realize that when you sell your home, the impact may be the same or may be worse.

If you begin with the end in mind, that is, buy with selling in mind, you will purchase a home that will enjoy a better chance of selling in any market.

Want to improve your possible resale value when you purchase a Santa Clara County house or condo? Buy a home that has the potential of appealling to the largest possible audience. Begin with the end in mind. Some of the homes that have the most difficulty selling in every market appeal only to a small pool of buyers. For current homeowners who want to sell, the advice is the same: get your home into shape so that it appeals to the largest group of potential buyers.

We’ll discuss “what buyers want” in a future post soon so that sellers can get their home into the best possible condition for resale value.

Buying & selling a home is usually stressful for consumers, and some circumstances can heighten the anxiety further (being in multiple offers, buying a distressed home, or anything out of the ordinary).  Once you write an offer or receive one on your property, you may feel like a nervous wreck as you navigate the escrow period. In some cases, you may come down with a bad case of buyer’s remorse or seller’s remorse.

We’re In Escrow: Now What?

You will want insights and advice so that you’re sure that you are doing the right thing each step of the way.  Even if you have a great Realtor who thoroughly understands Silicon Valley real estate and is a fantastic communicator, perhaps you want some assurance from an outside source (who’s not being paid for closing the deal) that you really are making good choices in the home sale.

There are a bunch of bad ways to do this but also some good alternatives.

What not to do:

1. Don’t call all of your local Realtor friends whom you didn’t hire and ask for their input.  First, it’s not fair to them as businesspeople that you want their professional input but not for compensation.  Second, they aren’t supposed to meddle and it puts them in an akward position of “implied agency” in which they take on some risk (being your expert upon whose advice they rely) without the benefit of ever getting paid.
2. Beware the well-intentioned advice of non-professionals who may not be up to speed with the current market conditions, construction, your purchase agreement, etc.  Sometimes the “over the cubicle wall” advice can be very, very upsetting as these folks get a homebuyer or home seller freaked out – often over nothing or over a misunderstanding of the situation due to a lack of information.   Most often, this “advice” is from completely unqualified people and will compound problems rather than help to solve them.

How about some good alternatives?

There are a bunch of ways to combat the “in escrow jitters” and to get reassurance that you are on track and making good choices in your home purchase or home sale. (Or to validate that there is a problem which needs addressing.)

Begin by laying the groundwork to prevent problems. Before you ever get into contract, do your research upfront - keep up with your local market conditions by visiting open houses, talking to friends who have recently bought and sold real estate local to you, and reading a variety of good sources, from regular news sites (such as the San Jose Mercury News)  to realty blogs (such as this one or Live in Los Gatos) and real estate related websites & news portals.   (Homesellers, forgive the plug but I also have a book addressing the needs and questions of selling a home in Siicon Valley – I provide it to those who interview me while choosing an agent as my gift: Get The Best Deal When Selling Your Home in Silicon Valley.)    Starting with realistic expectations and understanding of the “lay of the land” are key to keeping reasonably calm in escrow.

Check the market stats:

• Altos Research (shows data from listed homes)
• The Real Estate Report (my Silicon Valley report)

Read a few solid news sources:

• Inman News
• Realty Times
• Deadline News

Research well, then hire, a great Realtor.  Talk with several qualified, competant, experienced, ethical Realtors before choosing one with whom you’ll work.  Hire well: this will be one of the most important decisions you make in homebuying or home selling. If you work with a great agent, your confidence will be boosted and your transaction should go smoother.

Perhaps you’ve been 100% on track, you know the market, understand the contract and have hired a super agent,  but now that you’re in escrow, you’re worried about every turn of events.   The home inspection finds some things.  The appraiser is slow to do the report.  The other party in the transaction is behind with some paperwork….  How worried should you be?  Is it nothing? Or is it the beginning of a great catastrophe?  You find yourself waking up in the middle of the night with heart palpitations over this real estate transaction.

If you find yourself freaking out, you probably need some information to keep that adrenaline in check.

First, talk to your Realtor.  Discuss your concerns and questions.  A lot of times it’s the unknown that gets us upset, so find out what the risks of the particular issue may be.  What is the likely resolution? What is the worst that could happen? Get a sense of the proportion of the problem.

Second, keep notes – sometimes being upset can make it hard to remember things, so you may find yourself asking the same question three times in one week. This is not unusual, but if you write down the answer when you first get it, you can be reminded faster than if you have to wait until you reach your agent.

Be gentle on yourself if you do forget something that’s been explained, and realize that emotions can and do play games with your memory.

If you need to bounce the situation off of other professionals, there are online sites that can help you with that, but realize that these are of limited help since other agents do not have 100% of the information you & your agent have. For instance, in most of California, buyers and sellers of residential real estate tend to use the CAR (California Association of Realtors) purchase agreement (contract).  But in part of the San Francisco Bay Area, especially along the Peninsula and west valley areas of Santa Clara County (such as Los Gatos, Monte Sereno and Saratoga), another form is used much of the time – the PRDS (Peninsula Regional Data Service) contract.  This makes an enormous difference in several aspects of the escrow, such as with repairs done prior to the completion of the sale.  Agents in other parts of the state may not understand the contractual nuances, and consumers may not even realize that while they’re discussing the ramifications of one form, agents online may presume it to be a completely different one. That’s just one area where there could be a misfire of information.

With those caveats explained, three great & interactive real estate resources for consumers (nervous and otherwise) and people interested in buying and selling homes are these:

Cyberhomes
Trulia
Zillow

All three of these sites enable viewers to connect with real estate information, professionals and other consumers, and all are at no cost.  Questions with great detail will usually procure better, more useful responses.  (Example: “I put an offer in on a home but didn’t get it – why did that happen?” is not as helpful to an agent wanting to assist you as “I put an offer in on a home but there were 14 offers and I lost out to an all-cash offer – what can I do differently next time?”)

Finally, if a situation arises that is truly a significant problem, do not be afraid to seek out the help of a good real estate attorney.  Sometimes a brief consultation can bring light to a difficulty – it does not always turn into a giant fee to get strong help.  Again, hire well – don’t just pick a name out of the phone book!

Home buying and home selling is a big deal, and it will entail some concern and stress, but it doesn’t have to be overwhelming.  There will be many decisions to be made along the way, but if you hire a great agent and go into the transaction understanding the general terrain because you are well informed, you will be better equipped to handle the ordinary stress and able to avoid the unnecessary stresses.  If you hit a bad bump in the road and need a little extra help, know that it’s there, too, whether through your Silicon Valley Realtor, online or at the office of a good lawyer.  The best way to combat stress and worry is to be armed with understandable information – and it is available to you!

If you’re a Silicon Valley homeowner, you will sometimes need to replace elements of your home, such as the roof or water heater, or do repairs or remodeling to keep the home functional, comfortable, and efficient. Kitchens and bathrooms need to be updated from time to time, and sometimes remodeled. These repairs and remodeling projects often (if not always) require permits and finals.

Will you apply and pay for the required permits and finals?

What difference does it make if you do or do not get them?

Will it matter when you sell your home?

If you’re a Silicon Valley homebuyer, the whole idea of buying a home without all the necessary permits is a bit spooky.  My buyer clients often hear or read something like “garage conversion done – permits unknown” or “kitchen remodel done by contractor but without permits”.  They worry about the consequences of buying homes with non-permitted work, so let’s talk about the issues involved.

What is the risk in having non-permitted, non-finalled work done in a home (for both buyer and seller)?

Having non permitted work is risky for a few reasons. 

One of the biggest risks is safety.  Although there’s no guaranttee that work with permits and finals was done properly, the odds that the work is properly and safely done are improved that this is the case with a second set of eyes and an official standard at hand.  Non-permitted work is lacking the checks and balances that having a city, town, or county inspector invovled provides.

Another big risk is that the insurance may not cover a claim if damage was caused by non-permitted work.  For instance, let’s say you had some electrical work done that wasn’t permitted, and a fire was later caused by faulty wiring.  Your insurance company may not pay out on your policy if the cause was something non-permitted, non-finalled.

What about resale?  Other issues with non-permitted work involve  selling the home later. Buyers can get spooked by non-permitted work, and this can pull the price down (it’s a bit of a stigma).  Appraisers and realty professionals typically will not value non-permitted remodels as highly as remodeling done with all the required documentation – this can be a huge problem.  Some appraisers will count a remodeled kitchen as worth ZERO dollars if there are no permits and finals.  (That’s extreme.)   More typically, non-permitted remodeling may count at half the value of a properly documented job. Lastly, not to be underestimated in the current climate, there are  lender concerns (they may not fund if there’s a worry about the home, legal square footage, or value of improvements).  FHA appraisals and loans have very stringent standards so this could be a problemmatic area.

Why would a homeowner NOT get permits and finals?  Sometimes property owners skip the paperwork and “hoops” because they are ignorant and do not know any better. It is not always intuitively obvious when something needs a permit, and requirements vary from place to place. Sometimes they want to just do a job themselves (this is not uncommon with electrical engineers here in Silicon Valley doing a little wiring of this or that in their homes) or feel it’s just another cost and don’t want to bother.

Also it is not unusual for contractors to quote two prices: one if the seller has the contractor deal with permits and finals, and a different, lower price if that element of the project is skipped.  Tight on money? (Who isn’t, these days?) That’s a place someone might elect to cut a corner. So economics sometimes plays a role in the choice.

What about the government? In terms of city, town, or county government, usually there’s not a threat that non-permitted work will be removed,  but there’s no guarantee of that in terms of room additions or home expansion. Sometimes other work may be done that requires a permit, and perhaps the inspector won’t “final” that until everything is in compliance. Early in my real estate career I had a listing with an illegal addition and that room had to be removed before we could close escrow. 

How hard is it to fix non-permitted work later?  Truthfully, it varies. Sometimes it’s simply a matter of paying a few dollars more. Other times, though, the code may have changed and you’ll get stuck ripping out what would have been ok when the work was done but forced now to bring it up to “current code”.  It is a whole lot easier, and cheaper in the long run, to simply do it right the first time.

Any other words of advice with permit paperwork in Santa Clara County? Yes: if you do the work and get it “signed off”, KEEP A COPY IN A SAFE PLACE. Government offices, like any office, sometimes misfile, lose, or accidentally destroy critically important information. Do not, under any circumstances, rely on someone or some office to keep accurate records on your behalf.  If you cannot later prove that you did the work with permits and finals, you’ll be at a major disadvantage. Keep copies in a safe place!

Related articles:
Building Permits Are Online and Easy to View in San Jose
Monte Sereno Building Permit Nightmare (on my Live in Los Gatos blog)

What does it take to be a successful move-up buyer in Silicon Valley right now?  How hard is that to do? What does it take for a move up scenario in the San Jose area to be a possibility?

(1) Buyers are extremely picky – most want a turnkey, perfect home.

(2) Homes that need work (updating, remodeling) are selling at deep discounts, if they sell at all.

(3) Loans are harder to come by then they used to be. If your credit is not perfect, clean it up!  Save for a bigger downpayment, especially in the arena of jumbo loans.

If you must sell the current home to buy the next home, you’ll need to get your house or condo into ideal condition.  If you can buy the next home without selling the current one, it’s a great rental market!  You may want to investigate the possibility of investing by holding your current home and renting it out. Talk to your tax professional about the ramifications of doing this before you decide. 

Although it is a buyer’s market everywhere, from Mountain View to Monte Sereno to Morgan Hill, the degree of it varies from one area and price point to the next.  You may do very well if you are selling in an area that’s more desireable and moving to an area which is experiencing a deeper buyers market. A couple of examples would be selling a home in Cupertino, Saratoga, Monte Sereno, or Los Gatos (where the schools are highly regarded and the commute is shorter) and buying the next property in the south county areas such as Gilroy, Morgan Hill or San Martin (where it is a deeper buyers market).

Another strategy that should be very effective in the current market is to suffer through the updating that your current home needs, and then buy a home that needs that also needs remodeling or updating. The homes that need to be updated or remodeled throughout appear to be selling at incredibly low prices, whereas some houses which are completely turnkey are getting multiple offers when priced right. Last week I saw an investment property which had been bought as a banked owned home, remodeled quickly and put back on the market (as a “flipped” home if it sells). So sell something that everyone will want, and buy something that no one wants now because of the effort involved in updating. Just make sure that the location is ideal!

This is, of course, “general information” and is not intended to replace a consultation with me or other real estate professionals who can assist you with specific information that pertains to you, your home, your wants & needs, and the current market conditions. Please contact me today for a private consultation.

Thinking of selling your home in Silicon Valley?  No matter what kind of residential real estate you may own, this book offers guidance that will be a huge help in maximizing your profits from the sale of your home and doing it with the least amount of “hassle” possible!

Written with the consumers’ biggest questions in mind, “Get The Best Deal When Selling Your Home in Silicon Valley” aims to help property owners tackle the enormous task of selling their homes from start to finish. We, the authors, (Ken Deshaies and I, Mary Pope-Handy), address the gamut of topics in this comprehensive book, from how to chose an agent (or whether to “go it alone”), the role of the internet in marketing and selling your home, presenting your silicon valley home in its best light (staging tips, showing tips), selling your property in any kind of market (buyers market or sellers market), how to screen potential buyers and what to expect in the escrow process. The second part of the book discusses buying the next home, avoiding mortgage headaches, provides a moving list and a real estate glossary.

How can you get this book?

The book is available throughout the greater San Jose and Silicon Valley areas in Border’s and Barnes & Noble bookstores. If they run out, it can be ordered for you. Or order it online at Amazon and have it delivered to you at your home.

It is also available directly from me and is a tool I provide to prospective seller and buyer clients. (Although the book is largely about homeselling, the second part of the book is also about home buying.) Call or email me today for your free 30-60 minute consultation and receive this book at our meeting.