Homes which are dark inside, or which feel dark to potential buyers, are much more difficult to sell, and virtually always sell for less money than those which are perceived as “light, bright and airy”.  While a property’s owner might love the cozy feeling of dark paneling, deep overhangs and low lighting, it’s not what most buyers want today.  To maximize the amount a house, condo or townhouse in Silicon Valley will sell for, it’s imperative to make it as attractive to buyers as possible.  In many cases, that means it needs to be lightened and brightened to sell for top dollar.

How can a home owner make a house or home be – or seem – more bright?  One of the biggest “offenders” in this area involves windows! Here are a few window-related problems that can make a home feel significantly darker than necessary, together with some potential solutions:

• an interior room with no windows (seen with additions sometimes) or dark hallway

**consider adding a sun tunnel or skylight (as well as ceiling & other lights)

• tinted windows

**remove film, if applicable, or replace with non-tinted windows

• curtains/blinds which obstruct part of the window

**pull back so that 100%, or close to it, of window is visible

• shrubs, and trees covering some of the window

**trim back so the window’s glass panes are 100% visible, if at all possible, to let maximum light in

• deep roof overhang which prevents sunlight from directly entering the home for much of the day

**look into adding skylights over the porch – keep the overhang but allow more light in!

Once you’ve done as much as possible to allow the maximum amount of natural light into the home through the windows, it’s time to tackle other areas where light is either absent, minimal, or otherwise obstructed.

• heavily landscaped yards, especially with many thick, deep trees and/or hillside adjacent

**being close to a hill will cut down on light and can’t be mitigated, but a heavy canopy of shade from thick, tall trees can be addressed with trimming and thinning (possibly topping) the trees. Don’t remove or severely trim – many areas have laws against damaging trees or removing larger ones so check before you do anything.

• lack of ceiling lights inside: many houses lack high lighting and instead rely upon lamps at the coffee table level.  These will not be able to make a room as bright as lights on the ceiling or high on the wall (sconces)

**Adding recessed or other lighting up high can make a huge difference in the amount of light there.

• dark floor coverings and wall coverings – these don’t make a room darker per se but they make buyers feel that the room is heavy and dark

**best to remove dark paneling, wallpaper and carpet and substitute lighter colors instead to create the “light, bright and airy” feeling that buyers strongly prefer

Every home is unique, so hire a great Realtor who can assist you in making your Silicon Valley home as appealing as possible to the largest numbers of buyers so that you can get the best deal when selling your home.

More home selling tips & information

Home sellers: beware over improving your property when preparing to sell

Selling your home in rainy weather

Home selling tips (ValleyOfHeartsDelight.com site)

Free reports about selling (popehandy.com site)

Each year, Inman News sponsors a “people’s choice” voting for the most influential person in real estate.  Inman nominates 100 strong candidates but voters may also write in someone not listed.  This week, I was very deeply honored to have been included on such a prestigious list of real estate leaders nationwide, and I’d be thrilled if you would consider voting for me.

Where to vote:  follow this link and the fields for entering your desired winner’s name and info will be about 20% of the way down (midway through the article and just after a large ad) – deadline is Dec 1, 2011:

http://www.inman.com/news/2011/11/2/2011-peoples-choice-real-estates-most-influential

What is Inman looking for with this people’s choice voting?  I’ll quote a couple of passages and then comment.

“It’s time to vote for a leader who you believe has had the most substantial impact on the real estate industry in the past year. “  

“The Inman 100 list recognizes those whose voices and actions have the power to change the industry. Among them are individuals who embody strength, common sense, innovation, ingenuity, perseverance and progress. They include the industry’s brain trust and dealmakers, and those outside the industry who impact the business of buying and selling homes.”

So how did I, Mary Pope-Handy, a Silicon Valley Realtor with Sereno Group in Los Gatos and not a CEO of a big brokerage or large vendor, get named with realty’s best & brightest? It’s very humbling. But I think I have a few ideas as to why I’m getting the national spotlight. I’ll break it into a few bullet points, for those who may only know me from local blogging or home sales.

• In 2007, together with Frances Flynn Thorsen, I won the Project Blogger contest (sponsored by Inman and Active Rain) and have been a leader in blogging and web marketing circles ever since.
• In 2011 I was named “the best real estate agent in Silicon Valley” by the San Jose Mercury News. (Many of my clients now come to me from my blogs.)
• Speaking & training: In addition to residential real estate sales in the San Jose, Los Gatos, Saratoga and greater Silicon Valley area (Santa Clara County and nearby), I do speak at real estate meetings, trainings and classes on blogging, social media, real estate and related topics; to keep it short, I’ll post a link rather than list my involvement:
  Read more about my speaking & training on my Valley of Hearts Delight website.
• While blogging is the most important part of social media for me, I am engaged on Facebook, Twitter, Linkedn, YouTube and other venues too. Through these, I have a pretty good reach or impact on the web.  This is good for my realty business generally but also good for the owners of homes I list, as they get fantastic exposure when listed for sale with me.
• I don’t just have one website or one blog, but rather a network of them.  I may be a little crazy for embracing blogging to this extent (yes, it is time consuming), but I  hear time and again how much the info I put out there is helping people, both consumers and other real estate licensees alike (and not just folks buying & selling homes).  I’ve had agents at Sereno Group thank me for blogging, saying that it raises the bar in the industry, makes the company look good, and in one case, by association, apparently I helped a colleague to gain a listing (he told me that I make him look good because it shows the strength of our firm).  That’s a positive influence too.
• When I train, speak to or blog for a real estate agent audience, I try to provide helpful tips and encourage authenticity and transparency and to skip the games, the slick closing techniques or any smoke & mirrors. In other words, I really do try to raise the bar on our standard of practice.   I can be outspoken on what I believe is right or wrong with either the way the business is worked or, perhaps more of interest at the moment, the way social media is being employed to help agents to run their business. Sometimes I hold positions that aren’t popular but I hope that at a minimum, it helps agents to reconsider putting their values into action for the betterment of consumers as well as the real estate community.

Who, then, is a big real estate influencer?  I suspect that everyone on this highly esteemed list really is one.  Heads of brokerages directly impact how those companies work, their standards and requirements, how they hire and train and so on.  Real estate coaches (and there were several of them on this collection of super stars) directly impact their clients – agents and brokers – and help them to improve the way they work, suggest how those individuals can best use their time, etc.  I could go through the list and indicate why each category matters.

Only about a dozen of us on the list are simply Realtors, in the trenches, selling and networking and changing to meet the changing demands of the industry.   My hat is off to each person named, whether a real estate agent, vendor, CEO, manager coach or any other category.  And there are many other great people who weren’t there in writing who also deserve kudos as well.  I think it’s fair to say that everyone listed this year or in recent years past has been a highly influential force in the real estate landscape today.  We can’t vote for them all.  I do hope that you will vote for me!

How is the Williams Elementary School area of San Jose’s Almaden Valley 95120 doing in terms of the real estate market? Today we’ll look at the Williams area as compared to Almaden as a whole to see. First, the basic realty trends and stats for this nice section of Silicon Valley side by side for this year only (I pulled and crunched all of this data from MLSListings.com myself tonight, “deemed reliable but not guaranteed”):

1. Comparison of the average price per square foot for all of Almaden (including the Williams area) with just the Williams area of 95120:

While there is some fluctuation from one status to the next, at the end of the day there’s one number that matters the most, and that’s what actually sold and closed.  In the Williams area, homes have sold at an average of $418 per square foot while in Almaden generally (including this area), the price is $399 per square foot – about 5% less. This is tremendously important to understand if you are trying to purchase a home in the Williams area – homes there do, in fact, sell for more than in most parts (perhaps all parts) of the Almaden Valley.

Next, the stats for just the Williams area followed by the stats for all of 95120.

2. Real estate market statistics for Williams area of Almaden year to date by status:

3. Real estate in Almaden (San Jose 95120) as a whole (including Williams neighborhood):

4. Some graphs on the market in these two areas of San Jose 95120:

All Almaden - average sales price per month

And next, just the Williams area within 95120:

Average sales price per month in Williams School area of Almaden

Days to sell (days on market prior to going under contract) in Almaden…

Almaden (all) days to sell over time

Same data but just for the Williams Elementary School neighborhood in San Jose:

Wiiliams area of Almaden: days to sell over time

Supply and demand -  San Jose 95120 homes for sale and homes sold each month:

All Almaden homes for sale vs sold

Next, supply and demand in just the Williams area (most months, the ratios are tighter in Williams):

Williams neighborhood - homes for sale vs sold (supply demand)

New listings – first, all of Almaden (buyers will be interested in seeing the price spread):

Almaden listings by price range each month

Wms area price spread – it’s a smaller neighborhood with fewer inexpensive, and more expensive, properties:

Listings by price range in Williams area of Almaden Valley (San Jose 95120)

Months of inventory for San Jose 95120 (Almaden Valley or Almaden area) – six months is considered “balanced”, less a sellers market and more a buyers market.  It’s been pretty good in this corner of Silicon Valley, as you can see, except for the worst of the market in 2008-09 especially.

Months of inventory for all of San Jose 95120

Next, same info but just in the Williams subset of the Almaden market:

Months of inventory in Williams area

Note that the market in the Williams area has been a little harder hit than Almaden as a whole for the months of inventory. Why is that? My hunch is that it’s a couple of things: first and foremost, these homes are more expensive. The typical 4 bed, 2 bath home is about $1 million in Almaden generally but about $1,150,000 in the areas with the best schools, including Williams and Graystone.  The more expensive homes have been challenged by the financing regulations – these are not FHA homes and require a lot of cash down. Many would be move up buyers are stuck due to lack of equity.  A secondary reason may be the further commute.  Many buyers are more frugal now that gas is hovering near $4 a gallon.  Whatever the cause, these premier homes are not selling as well as many of their owners would like to expect.

List price to sales price ratio Almaden

And finally the same list to sales price ratio just in Williams:

Sale to List Price Ratio in Williams area of Almaden

I hope you’ve found this information and analysis helpful.  Whether you’re buying or selling, it’s very helpful to know the local market.  These types of posts do take a lot of time to produce, so I don’t do them so extensively so often, but I can do this type of thing for my clients. If you are looking for a Realtor who’s committed to giving you top grade information so that you can be best informed, please call or email me. I’d love to have the chance to chat with you and see if we might be able to work together on your next purchase or sale in Almaden or anywhere in Santa Clara County.

mary (at) popehandy (dot) com

Related reading:

Schools, API Scores & Maps of School Boundaries in San Jose’s Almaden Valley

The RE Report for Almaden Valley (updated monthly, stats also quarterly and annually going back 10+ years)

This week I was emailed about a home mentioned on Trulia which seemed “too good to be true”.  It was a distressed property and the reader thought it was for sale for about $650,000 but it is in an extremely upscale suburb on the Peninsula and she could not find the home for sale on our MLS.  She didn’t want to pay to find out if this was a hoax or what, so she asked me to please have a look.

I clicked on her link and saw that it was a feed into Trulia from one of the companies which provides foreclosure information to consumers by paid subscription.  No where did it say the home was for sale, but instead it indicated that $650,000 was the home owner’s loan amount – and that the property had a Notice of Default filed against it.  The house wasn’t worth anywhere near $650,000, of course – instead it’s valued at more than $2,000,000.  (So this would NOT be a short sale – there’s tons of equity in this property.)

Some consumers think that if a home has a NOD, it is for sale.  That is simply not true.  Many homeowners (including some of my clients) have at times missed a payment and then found themselves scrambling a little to get caught up.  It’s not easy but it can and does happen sometimes.

Now imagine yourself as that homeowner with a Silicon Valley house you love but that you’ve had some trouble with late, partial or missed mortgage payments.  You are trying to keep your house but someone comes to your front door and thinks your home can be bought for the amount of the loan or the delinquencies or both.  I’ve seen million dollar homes in Los Gatos with a very small second loan, such as $20,000, that went into default. You’d be seriously misguided to think that homeowner will part with a $1 million home for the $20,000 that is owed.  Just because the seller is behind doesn’t make the seller stupid!

Some of these sites which sell foreclosure info to consumers do both them and the home owner a great disservice by implying that condos, townhouses and houses which are in pre-foreclosure are available for purchase.  If the owner wants to sell, the property will be listed for sale with a real estate agent or broker, or at the very least there will be a for sale by owner ad found on Craigslist or a sign on the front yard.  Show up on that struggling owner’s front porch and ask to buy the house at a crazy low price and you’re just throwing salt on the wound. Don’t do it.

For further reading on distressed sales, pre-foreclosures and short sales:

Q & A on short sales (popehandy.com website)

What’s the difference between short sales and foreclosures? What is an auction?

Short Sales Sell But Often Don’t Close: Why?

Smart, saavy Silicon Valley real estate agents won’t take just any listing.   New agents (or brokerages, for that matter) or those struggling may be less picky.  This may be confusing to home owners who find that some Realtors will agree to list the home, others won’t – so let’s discuss it a little.

Real estate licensees aren’t just people who hold open houses on weekends.  Rather, real estate agents are independent businesspeople in the business of selling real estate. Many of them work 50+ hours per week.  In order to be successful, they have to evaluate the probability of success, whether with buyers or sellers, before deciding to take on those clients.  If they agree to work with buyers who never buy or sellers who never sell, they will be out of time, out of money, and if they make this judgement mistake too often, out of business entirely.   In the last 4-5 years about 1/3 of real estate salespeople have left the industry.  Those who are surviving or thriving are very judicious about how they expend their time and resources.

Under some circumstances, home sellers may project enough “red flags” or have unreasonable expectations such that real estate agents will turn down the chance to list their home.  Here are a few things I’ve run into over the years, either personally or heard about from other agents who said no to sellers:

1. Unrealistic expection on likely sales price of the home (demanding more than the probable buyer’s value of the home)
2. Unwilling to compensate agents or brokers as they require OR expecting them to take on far more work than is to be expected in selling a property (such as overseeing the entire remodel of a house – we are not general contractors!)
3. Overly restrictive showings (too much advance notice, insisting that listing agent be present for all showings)
4. Not permitting some basic marketing or access avenues (no open house, no sign, no lockbox) or unwilling to follow sound professional advice on staging, presale inspections to make the property attractive to buyers – these are “basics”
5. Problems with showings (messy, smelly homes or sellers insist on staying home during showings, follow buyers around in the house etc.)
6. Secretiveness – when sellers won’t level with agents about their plans it sets a bad, even scary, tone that causes agents to worry about hidden risks
7. Nastiness, second guessing or micro-managing – some sellers may want to call the agent 8 or 10 times per day or desire to oversee even the smallest detail on marketing the home (see every email sent, for example).  Others can be rude or insulting.  Some constantly double check everything the agent says to verify every angle or detail and then quotes back to the agent “well another agent I know says…” which is frustrating and insulting.  Sometimes listening to others at work, who are unqualified to give real estate advice and getting that “over the cubicle wall advice”, causes home owners to not follow their agent’s advice (see # 4 above).
8. Concerns over legal problems and liability, such as a home owner with dementia selling the house rather than the adult kids or other friends or relatives getting a power of attorney to do it for the parent (I have run into this directly). If there are any mental capacity issues, it is a lawsuit waiting to happen.

Most of the time, real estate agents want to list good homes and have the opportunity to market and sell them.  If they (or I) see enough “red flags” with a seller or the property, though, it’s time to decline the opportunity.  Often times, these same houses do not sell the first time they are on the market but later become an expired, withdrawn or cancelled listing.  (Sometimes they simply take a very long time to sell as the owners adjust to market realities and begin to accept their agent’s advice.)  Sellers wonder to themselves, “why didn’t my house sell?”  The answer is often an inflated price but just as often there are other problems compunding the failed sales effort too, very frequently an unwillingness to follow professional real estate advice.

Not every home will sell.  A wise real estate sales person will not get hooked into a listing agreement where the seller isn’t as motivated to sell the property as the agent is to sell it.  This is a team effort, requiring a shared vision of what needs to happen.  Even under the best of circumstances, homes don’t always sell.  So if there are big issues from the seller or the way the home is shown, it’s a bad business decision for the real estate licensee to get tied to them – it’s too much like trying to do the job with one hand tied behind your back. Who agents and brokers work with is ultimately a business decision.  If they are turning you down for the listing contract, at the end of the day it’s a statement about your or your property’s business risk. If you are confused as to why they decline the opportunity to list your house, townhouse or condo, you can always ask them, and most likely you’ll get a helpful answer.

Our fall weather here in Silicon Valley is acting like spring weather – bouncing back and forth between warm, dry days and cold, wet ones.  Should this impact the way you present your home to the real estate market if it’s for sale?  Absolutely.

If you want to make the best impression on potential home buyers, your house, townhouse or condo needs to be inviting no matter what the weather may be doing.  In the heat of summer, sellers are tempted to close up all the curtains to keep out the sun and heat – it’s a mistake because buyers typically don’t respond well to dark, cave like homes.  The wet weather brings different challenges that also must be handled appropriately if you are to snag that best buyer!  Here are a few tips to make your listing the one that appeals to Silicon Valley home buyers who come out to see it:

1. Make sure that your downspouts are directing rain water away from your house or any structures (often 6′ or more is suggested); it is imperative that there be no “pooling” of water, especially near the home – this will cause buyers to worry about water in the crawl space and what it may be doing (foundation cracks, mold, etc.)
2. Trim bushes and vegetation back from walkways and sidewalks.  When it’s wet outside, these lovely bunches of greenery collect water and as visitors go past them, they can spill water onto the passers by. Not pleasant.  Look at your sidewalks, driveway, and walkway and make sure that wet bushes and branches won’t be hitting anyone coming up to your front door.
3. If your gutters leak, they’ll be noticed and will indicate that your property hasn’t been properly maintained, so repair or replace them.
4. Indoors, keep the heat on if the temperature would be below the comfortable range – cold buyers don’t linger, and buyers who don’t linger don’t buy! I suggest at least 66-67 degrees.
5. Open up the curtains and turn the lights on.  Cloudy, rainy weather can make any house look dark and you want to chase the darkness away with good lighting and access to natural light.
6. Many home buyers will want to remove their shoes if it’s wet out. If you can provide a bench on the front porch or entryway, that would be very welcoming.
7. Keep the air fresh. In the damp days, we sometimes keep homes a little too closed up and that can be unappealing. Baking cookies or bread can help, but there are other things that work too, such as fresh flowers.  I don’t recommend scented candles or sprays since these often make buyers wonder what you’re hiding.  It’s a matter of degree – you want to make the air pleasant without overwhelming visitors.

When home buyers and their real estate agents venture out on a rainy, wet day to see properties in San Jose, Los Gatos, or anywhere in the Bay Area, you know that they are serious and highly motivated.  It may seem like a hassle to take these extra steps for showings of your house or condominium, but it’s well worth it because these are exactly the home buyers you’d like to impress.

For further reading on home selling in Silicon Valley:

Home selling posts on this website

Selling your home in Silicon Valley on popehandy.com

Home seller resources on ValleyOfHeartsDelight.com (sister site to this one)

A real estate contingency is a provision that something must be overcome or approved to consummate a transaction.  In other words, it’s a condition, such as “I will buy this house IF (fill in the blank)”.

Silicon Valley real estate consumers are well aware that home buyers normally have a few contingencies during escrow.  The major ones are for property condition or inspection and loan or finance (to include appraisal).  But there are others too, such as approving the preliminary title report, obtaining and accepting disclosures etc. (On rare occasions, such as some tenant occupied properties, the buyer may have to make an offer first and then, after it’s accepted, view the home or apartment building. In that case it’s “write offer subject to inspection” – a contingency that you’ll accept it after you get into escrow! This is how apartment buildings and some multi-family dwellings are sold.)

What about seller contingencies?

Sellers, too, may be able to back out of the contract if certain conditions are not met.  The two we see most common are these:

1. In the case of a short sale, the sellers have a contingency for bank approval and for their acceptance of the bank’s terms.  If the bank doesn’t approve the short payoff, the seller does not have to sell the house to the buyer.
2. Sometimes sellers only want to sell their home if they can find another one which they wish to purchase.  This can be a contingency also: “sale subject to sellers’ finding a replacement property within X number of days“.

Some homes are part of a co-op (cooperative) and in a few areas around the country, I think mainly in New York City, a board must approve whomever wants to purchase the home or unit.  In those cases, there would be a seller contingency for board approval.  I have never run into it in the San Jose, Los Gatos, or Saratoga area but it is possible that you could see it somewhere in California.

How does a seller’s contingency impact value and desirability?

Seller contingencies usually make it difficult to attract buyers since there is a giant unknown in terms of the ability to close escrow and it’s not in the buyer’s control to fix it.  With short sales, that contingency must be in place for the seller, but not so for the “replacement property” clause.  When sellers invoke that contingency (which must be listed in the MLS), it will usually cut down on showings, offers, and ultimately the probable buyer’s value for the home – so normally this is not advisable.

If you don’t see the MLS printout on your property when it’s on the market, you could be missing errors and typos that have slipped past your agent.  Or you may simply prefer that certain elements be emphasized over others.  I’m convinced that many Silicon Valley home sellers never view or critique the agent report or comments though – if they did they’d probably have a bit of a heart attack.

Errors and typos are not uncommon.  Once I helped a buyer to purchase a 3 bed, 2 bath home which was incorrectly represented in the multiple listing service as 3 bedrooms, 1.5 baths.  This of course was to our advantage, but the seller probably had less traffic, and ultimately a lower sales price, because of the data entry error.It should have been caught by the agent, of course, but the seller too should have been more responsible. No one knows your home like you do!

Sometimes the typos are funny, if unintentionally so.  I saw one house which boasted dual pain windows (makes you wonder!).  A walk in pantry was once said to be a walk in panty. This happens not just on the mls of course.  One friend mentioned to me reading a termite report that said that the wood debris in the crawl space of a home was called “cellulite debris” instead of “cellulose debris”.  Mistakes happen. If you’re the seller, try to find them before they go public – or worse, viral!

The comments sections (most for everyone, but a few for just real estate licensees and members of the MLS) are crucially important to a successful sale – almost as important as having a lot of high quality photographs.   Let me give you an example.  Would you rather have your home described by the first or second set of comments?

1. LOCATION, LOCATION, LOCATION! Nice home in great area!!!
2. Classic, updated & remodeled Victorian on tree lined streets close to SJSU. Large formal entry, remodeled kitchen with granite & profession 6 burner range, large living & dining rooms. Newer furnace. Foundation upgraded in 2005.  Big front porch & private back yard.

These are just examples, of course – but these extremes are seen all the time – comments which say absolutely nothing and those which provide compelling details.  Then there are the ones which scream out that the seller is desperate: “Bring any offer!”  Really? Would you say that at an open house, in front of your client?  I bet not.

Perhaps most important of all are the photographs.  Biggest crime is having no photos or just one or two of the exterior of the property (I even see this with beautiful new construction!). Did you know that we can now upload more than 20 photographs of each listing to the mls – and that from there they can be syndicated to many major real estate portals?  It’s hugely important to take advantage of this.

Next in line of major mishaps with the mls is poor or dark images or houses or condos which are photographed messy (in need of staging and possibly cleaning).  If you want to see really terrible photos (so bad you have to laugh), log onto Facebook and search for the group “Really bad MLS photos“.  It is funny to Realtors only because we see other agents post these types of things and we wonder why their clients don’t fire them on the spot.  I’m sure it’s because the home seller never looks at the MLS printout at all.

The Silicon Valley real estate market is a mixed bag and home buyers and sellers here may read the headlines and wonder why things seem so different in the news than in their own personal reality!

Here are a few quick facts and observations about the San Jose and Santa Clara County real estate market for houses, condos and townhouses:

• It is a seller’s market for both houses and condominiums in Santa Clara County (homes are selling well and very close to list price on average)
• The average and median sales price for houses & duet homes is down month over month and year over year (properties that are selling are those which are priced lower)
• For condos and townhomes, prices are up month over month (but down year over year).  The condo market here has taken a huge beating in recent years.
• The market is not equally hot everywhere!  It’s red hot in Palo Alto, Los Altos, Cupertino, and areas nearby (Santa Clara, Sunnyvale, Mountain View).  It is also hot where there are low priced foreclosure houses which can be bought at bargain rates.  The move-up market has been tough entry level houses in the best school areas are very sought after right now.  (The market is decidedly cooler in Los Gatos and Almaden Valley.)
• Homes that are selling best are completely remodeled and have no “issues” (such as high voltage lines, poor floorplan, proximity to something undesirable etc.) and priced aggressively  OR are distressed sales with great pricing

In the best areas, or those with the hottest markets, we are seeing some multiple offers with overbidding.  At the same time, we are finding homes that look great but languish on the market due to some issue or another or pricing that’s not as competitive as it needs to be for today’s market (or both).

Sellers: if your home isn’t selling and it’s had good exposure, plenty of photos etc. and been on the market for a month or more, see if there’s an issue that you can fix or mitigate.  Obviously you cannot move high voltage lines or a freeway, but if there are odors, clutter, or landscaping issues, it would be wise to fix them.  That failing, to get your house sold it will probably require a significant price cut.  The longer it’s been on the market without a price change, probably the deeper the adjustment will need to be.

Buyers: tired of losing out on multiple offers?  That “perfect home” is the one that gets all the attention – but sometimes, just around the corner, there’s a property that with a little fixing could be just as sweet and that one can be purchased without so much competition or overbidding, so ultimately will cost you a lot less.  Every other buyer wants what you want: a turnkey home that needs nothing (inside or out).  But if you will push yourself a little and buy one which only needs one or two changes, you will find that your offer would be most welcome!

For instance, we know that right now (in these frugal times), many buyers do not want a pool – probably because of the ongoing maintenance costs.  An in-ground pool can be filled for anywhere from $8000 to $20,000 or $25,000, depending on a lot of variables.  If you want to buy a home with less competition, find the house with a pool and be willing to take on removing or filling it and re-landscaping.   This is a fixable issue!

For more reading see:

A summary of tips for multiple offer situations in Silicon Valley real estate contracts
(links to multiple posts on various aspects of competing in multiples)

Silicon Valley real estate tip: pinpoint the pricing, beware common buyer mistakes and fears

One of the worst marketing efforts, in my opinion, is a rider attached to a “for sale” sign stating “I’m gorgeous inside!“  It’s as if to say “I know the exterior is really bad, but just wait ’til you get past the front door!”

A better approach than an apologetic rider sign is to tidy up the front of the home and yard so it gives a great first impression.

If you are a potential seller, drive through your area (zip code, subdivision etc.) and have a look at the outside of other properties for sale which are generally similar to your own for size, pricing and so on. How’s the competition doing with curb appeal?  Pretend that you’re a Saratoga, Almaden or Cambrian home buyer.  Take notes.  What do you see?  Be brutal in your assessment and then take your observations back to your own home and keep the same standards.

First, pay attention to these landscaping elements in the yard:

1. The lawn, if there is one: is it green?  Weedy? Healthy? Does it have bare or dead spots? Is it level or “bumpy”?  Is it fairly uniform, or are there patches of various types of grasses in other areas, making the lawn uneven in color, texture, or density? Putting in fresh sod may give you a super “bang for your buck” or return on investment.Why does this matter? Because if your lawn looks neglected, buyers may wonder what else is neglected, too.
2. Bushes and shrubs should not impede sidewalks, walkways or views of doors and windows.  Buyers will feel crowded if they sense that plants are blocking their passage or that of light!  The yard, like the home, needs to feel uncluttered. As you look at the other homes’ yards, do the bushes look appealing or unruly? Are they a help or a hindrance to the home’s curb appeal?  Many buyers do not like ivy or juniper, by the way, unless they are exceedingly neat and in small quantities.

1. Color:  bright annuals with colorful flowers make a home far more inviting.  Is the yard solidly green? (All lawn and bushes?)  It can be spiced up with flowering plants and bushes.  If room is an issue, at the very minimum sellers could add color spots by the front door. Luckily, in Silicon Valley we enjoy a sub-tropical climate and even in winter there are annuals that can pack a nice punch of color.
2. Stuff in the yard: what are homeowners doing with hoses, watering cans, front porch furniture or kids’ toys?  Ideally, hoses and other items not in use will be curled up or otherwise pretty much out of sight. (Worst case – laying across walkways, inviting disaster as home buyers trip!)  Yard gnomes etc.: don’t. Seriously.

Next, have a look at the building itself.  How well maintained and attractive is the house, townhouse or condo and garage?  If the view of the structure is unappealing, Silicon Valley home buyers may never cross your threshold to see how great the interior is!

Check these items:

1. Paint – is it in good condition?  Wood tends to need painting about every five years, stucco closer to ten.  If paint is peeling or looking faded, at the very least it should have some “touch up” work done.  If it’s just dusty or sports a few spider webs or the like, perhaps a power washing will do the trick.  Peeling paint screams that “this house has deferred maintenance and is neglected”.
2. Doors and windows:  should be fully visible without bushes or other objects obstructing passage or the view of light.  They should look impeccably clean and function easily.  The hardware should sparkle.  A clean doormat is helpful too.A few months back I saw an MLS comment for agents advising that the door knob sticks and if this happens to use the large rock nearby to make it open. Bad, bad, bad. Sellers need to make their doors open smoothly – again, buyers will worry about what else doesn’t work right if the obvious stuff doesn’t!
3. Gutters, downspouts & roof – first look to see if there are gutters and if there’s coverage over the doorways especially. These components age and can leak at the seams if not well maintained.  Do you see rust at the seams?  If there are screens to keep leaves out, are they in place or have they moved and look a little off?  Small things like that can again send a wrong signal that your home is not well cared for when in fact it may actually be in great shape.Do the downspouts have any issues? Does the water simply dump out at the foundation? (If so, is there moss to address?)  If there are extenders, do they create any tripping hazards?The roof can accumulate stuff – particularly leaves in the autumn.  View the roof and gutter for buildup of debris, moss, etc.  Sometimes there’s so much accumulation of organic material in the gutters and roof area that grass and weeds begin to spring up.  I have even seen this on a home for sale!
4. Front porch: if the property enjoys a front porch, it’s a good idea to play it up with appropriately sized and welcoming furniture, if possible.  Often porches in newer houses or homes are not super big, so bistro sized tables & chairs may be the best best. It may also be a good play for color spots – bowls with colorful annuals to welcome visitors in.

Once you’ve found several homes in your neighborhood which are your property’s competition and have noted their curb appeal, go back to your own residence and see how yours stacks up in all these areas.  Write a list of what needs to be done.  You may need to call in some outside help to get things in top shape, but this is normally both time and money well spent in getting you the best sales price for your home.  This is true whether you’re selling a luxury home or a distressed property – a home that appeals to buyers will have a much better chance of selling faster and for top dollar than one which looks a bit neglected.

Finally: many sellers make a huge effort to put their home in great condition prior to going on the market, but once there, they sometimes let it slip.  Bushes or hedges become overgrown, patches of the lawn are too dry and begin to brown, or the yards generally become a little neglected.  Don’t do this – every serious buyer who sees a neglected yard will wonder what else has been neglected too!  Nervous or worried buyers write lower offers than those who are confident – so keep the yards up so you have your best return on investment.

Normally I don’t publish press releases, but this one is important – and has some consequences that I think should be mentioned lest weary, distressed home owners think that they are now out of the woods with short sales in California.

First, though, the press release from the California Association of Realtors (a trade group to which I belong).  Afterward, I’ll mention (some of) the negative impact and discuss why I see short sale lawsuits looming on the horizon in Silicon Valley and why this change may add one more reason for litigation.

CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law

LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law.   SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.

“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce.  “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

SB 458 contains an urgency clause making it effective upon signing.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with nearly 160,000 members dedicated to the advancement of professionalism in real estate.  C.A.R. is headquartered in Los Angeles.

This all sounds pretty good – home sellers who are given a short sale will not have to look over their shoulders for debt collectors and lawsuits over deficiency judgements later as banks try to recoup their losses.  There are many plusses, and CAR is generally correct in applauding the signing of this new bill.

BUT there’s a downside.  The most evident negative is that if the holders of 2nd liens cannot force the homeowner to cough up money (assuming they have it, which some do) for the short sale, these lenders will likely feel inclined to not play along with the short sale and force a foreclosure instead.  After the foreclosure, they may be able to sue for damages and come after the seller later – who knows how many years later, if they determine it’s worth waiting for.

And, of course, this is all the more likely if there’s silent mortgage insurance on the home (placed by the lender, unbeknownst to the home owner).

What will this do to the short sale inventory?  I suspect it will cause more delays and wrangling behind the scenes, slowing down the sale of short sale listings in Santa Clara County and throughout the state.  There may be word games – sellers aren’t forced to pay but if they volunteer, well, then the deal will go through.   Just semantics, right?

Short sale lawsuits are coming

Later, the short sale lawsuits will follow.  Some are in process now.  Already many lenders, real estate agents and home sellers are laying the groundwork for years and years of short sale litigation ahead. Most of it comes down to falsifying information (fraud) or negligence.   There’s enough blame to go around and we’ll find sellers (home owners), real estate agents, lenders, loan officers and others getting dragged into court over some stupid mistakes and calculated lies.

I predict that we will see court action over all of these issues:

• seller fraud regarding hardship (fudging their true status or creating a hardship in order to qualify)
• fraud – some sellers conceal assets to get the short sale, and banks may well find out about it later
• fraud lawsuits against sellers who never should have gotten loans in the first place since they falsified loan documents (and this may be discovered in the future)
• consumers suing banks over abuse of their own due process
• lawsuits about the missing notes (already happening) and the requirement to have the note in order to foreclose
• suits over improper foreclosure proceedings, improper evictions, etc.
• agents will be sued for promising to help get a loan mod, and not really following through in hopes of getting the short sale listing when the loan modification doesn’t come through (are we asking the fox to guard the henhouse here?)
• brokerages will be sued for some of the short sale mills created under their name – agents who build a huge business of short sales but allow some important, crucial details to fall through the cracks – sellers who lose to foreclosure will later sue for lack of due diligence and failure to perform as a good agent
• investors may sue their credit unions for avoidable losses in bungling short sales and allowing properties to go back  to them as REOs, suffering huge losses later
• banks will be sued for pushing too many short sales onto too few a supply of real estate professionals (I heard tell that one bank gave ONE Realtor 200 listings to handle) – these agents can’t do a good job for so many listings and consequently expensive mistakes are being made
• too many real estate agents are overly confident in giving “simple answers” to complex problems and failing to strongly recommend that their clients discuss their situation with legal and tax professionals – this may be the biggest mistake being made generally
• this new short sale law may cause 2nd lien holders to play games with words, suggesting that sellers can “volunteer” to pay – and those sellers will surely later sell for the duress

Tread carefully in this arena of short sales.  If you are underwater on your house and need to get out, talk with a real estate agent who’s ethical and seasoned, a real estate attorney AND a tax professional.  It is imperative that you do this so that you don’t become mired in lawsuits later.  They are surely coming.

About a year and a half ago, I wrote an article for Silicon Valley home sellers about preparing the house or condo for sale: Preparing Your Silicon Valley Home to Sell and Return on Investment.  In that piece, my hope was to convey to sellers that strategic improvements to their real estate prior to sale will result in a good return on investment.  Too often, sellers don’t want to do enough prep work so that they can maximize their sale price.

Sometimes, though, I meet property owners with a bent toward the other extreme.  They decide to do a whole ton of renovating (almost as if it were a house which they are flipping or one they want to be like brand new) in order to get more money from the sale of the house.   What they plan to do may be overspending or over improving.  It may be going too far such that the return on investment is actually lessened rather than improved.

Most of the time, your best investment will be in doing small, strategic repairs, renovating or improving.  You get a good return – even great – on things like paint, floor coverings and touching up the front landscaping.  Often even fresh sod can bring a good return because an attractive front yard will get home buyers to look inside, whereas really poor curb appeal may cause them to turn away. Counter tops, light fixtures, and maybe new interior doors can wow a buyer and give you a good bang for your buck.  Totally remodeling a kitchen (with new cabinets) or bathrooms may recoup you less than what you’re putting into it. Hire a great Realtor and then work with her or him to determine which improvements will net you the most.

Think of the pre sale home improvement like this: it’s lipstick and rouge, not cosmetic surgery.  Go too far and you not only won’t net the most from the sale, but you could actually lose money too.  “Balance in all things” applies to preparing your home to sell too.  Not too little, not too much.

If you have just bought your first Silicon Valley home, you may feel very relieved to have survived the contracts, negotiations, the disclosures, the appraisal and the escrow and made it all the way to closing.  You are a successful home buyer!  You move in, unpack and then…. what? What do you do?

I have a few suggestions.

First, while it’s fresh in your memory, pull out the disclosures and inspection reports and (if you haven’t done this already) make a list of the items you must do and want to do.  I suggest you include at least 3 categories:

1. Health & safety items
2. Protecting the house from damage
3. Lower level items with aesthetic value (decorating and in some cases remodeling)
4. Ongoing projects you want to remember to do periodically around the house and yard such as changing the smoke detector batteries, cleaning out the rain gutters, doing a “walk around the house” to check for any issues with vent screens, roof tiles etc. (If you have bought a condo or townhouse, this is still important.)

It is too easy to focus on updating to dual pane windows (gratifying since they look nice) and ignoring foundation cracks, electrical problems and termites, so making this type of list will help you to keep on track with the better priorities (1 and 2 as opposed to 3).

Second, pull together all of the expenses you laid out in purchasing your home. Create a file with a spreadsheet of your costs and the receipts that go with it (include a copy of your HUD 1).   This will be helpful in establishing your tax basis and may protect you when you eventually sell the house from paying more taxes than you’re legally required to do.  Go over it with your CPA or Enrolled Agent or Tax Professional as some of them may be deductible on your taxes this year and some may not qualify as related to your tax basis.

Third, if you haven’t already worked up a reasonable household budget, do it now and plan in both a reserve account and a plan on what repairs and improvements to do and in what order.  The reserve account is important because some expenses can come unexpectedly (fences blow down, water heaters die, water or sewer pipes can burst without warning).

Fourth, make sure that your insurance is up to date.  I advise making a list of major items in the house – a walk through with a video camera is a good idea too.  When you complete major projects, update the list.  Keep one paper copy somewhere safe and another copy either “in the cloud” or with a trusted friend or relative, ideally outside of Santa Clara County in case the reason for the need is an area wide problem.  Should your house ever burn down, you would need proof of your possessions for insurance purposes.

Lastly, now that you have a major asset (your house or home), you might consider creating a will & trust with the help of a good attorney.

If you are planning to purchase a home in Silicon Valley, most likely you’ll be working with a real estate professional and together you will use either the California Association of Realtors (CAR) purchase agreement form or the Peninsula Regional Data Source contract (PRDS). Both of them begin with the same basics: who is making the offer, what property is involved, how much is being offered to the home owner and how much is being put down or put into escrow as an initial deposit or good faith deposit.

What is the initial deposit in real estate contracts?

The initial deposit, or good faith deposit, is the amount of money which the buyer puts into the escrow account at the beginning of the transaction. It is usually given in a personal check, which is cashed within a day or two of being brought to the escrow holder (in our area, that’s a title company – in southern California, they tend to use escrow companies or even one of the real estate brokers).

How much is the initial deposit?

In Santa Clara County, or the San Jose area, often the initial deposit is anywhere from 1% to 3%.  I have occasionally seen offers with as little as $1,000 on them but have not seen sellers want to take those offers.  They want to know that the buyer they get into contract with “has a little skin in the game”.

Typically in the west valley areas, where I work, 3% upfront is the norm.

Some real estate trainers encourage aggressive buyers (or those in multiple offer situations) to put more than 3% down to make the point that they are serious enough to tie up more money in escrow – even if the liquidated damages clause keeps anything over 3% from ever being at risk in case of a default.  It does get the seller’s attention!

Is the initial deposit handled differently if it’s a short sale?

Usually buyers will not put any money into escrow until there’s bank approval for the short sale (and it’s a sure thing that they CAN buy the house).  But some listing agents are now demanding money in escrow – and also that the buyer have inspections done – prior to bank approval.

My personal opinion is that paying for inspections and appraisals without the lender approval puts the buyer in a terrible position of putting everything at risk (money on inspections, appraisal etc.) without the assurance that the seller will be able to close escrow.  So I would advise against this practice if I were representing the buyer since it’s a potential waste of money.

That said, I completely understand that many short sale sellers have been burned in the past by buyers who put offers on multiple houses at once, which of course is unethical since they were incapable of buying all of them.  The idea was that they’d tie up several homes and the first one with an approval would win.  But by keeping the others knotted up, they literally moved those other sellers closer to foreclosure. Terrible.  So I understand and support putting some money in escrow with short sales.  Often suggested: 1% upfront, 2% more when they get bank approval.  Each sale is different though, so talk with your Realtor about it.

Did you buy your house at the peak of the market?

Recently I met with some of my past clients, who purchased their San Jose house close to the height of the market (2005-2007).  In those days it was a hot seller’s market (not unlike many parts of the Silicon Valley real estate landscape today, actually), and buyers routinely purchased their homes “As Is“, meaning no repairs provided by the sellers.  Desperate to get in when prices were appreciating fast, it seemed that most home buyers said “we’ll take care of it after we own it“.

But they forgot.

Actually this didn’t just happen during the peak of the market here in Santa Clara County – there’s always a percentage of consumers who buy As Is to get a better price.  They have good intentions about taking care of the mold, the termites, the roof and whatever else might not be either in good working order or free of infestation.  But once they move in, the “to do list” doesn’t seem to have those items as a high priority, and over time they completely fall through the cracks.

Pull out your old file, find your inspection reports and review them, especially if you are preparing to sell your home

Today I want to encourage you to dig out your old home inspection and pest reports, dust them off, and have a look.  Did you need to address a problem with termites, electrical issues, leaks?  Is there something to take care of with the roof, gutters, dry rot or fungus?  All of those things do not self-correct, but instead grow worse over time. 

If your reports are more than three or five years old, you might consider getting new ones done since in all likelihood there’s more work, possibly in new areas, now. Just make sure you hire a reputable company which won’t gloss over problems, leaving them latent and waiting to cost you more in the end.  Don’t toss your old inspections out – have a look and see if everything that used to be called out is covered.  If you are planning to stay put, is best to correct everything so that your home is kept in good condition for the long haul. If you are planning to sell your home, it’s important to fix it up first if you want to get the most for your sale.  The market is very different from the peak, and having the home improvement work done is more important than ever now.

Are you buying a distressed property (short sale, bank owned, or pre-foreclosure) in Silicon Valley?

If you are purchasing a short sale, pre-foreclosure or bank owned home – let alone one at auction – please be aware that these properties are most often neglected and have more than a normal share of deferred maintenance.

You or your Realtor can look up the sales history for the home.  If it was purchased between 2005 and 2008, there’s a good chance that it was sold As Is and that if any repairs were needed, they weren’t done.

With pre-foreclosures or short sales, sometimes the sellers are well organized and will still have their old reports.  The agent may not be aware that these are available, but they can provide at least some information since pre-sale inspections are usually not provided with distressed sales.

For more reading on this topic:

How often should you get a termite inspection?

Would you recognize signs of subterranean termites if you saw them?

Watch for Dampwood Termites in Silicon Valley!