Other Good California Real Estate Blogs

Here's a small collection of California Real Estate Blogs I like and can endorse:


Silicon Valley Blogs
Cupertino-Sunnyvale
Morgan Hill-Gilroy
Palo Alto-Mountain View
Silicon Valley's Westside:
Almaden, Los Gatos, Saratoga
Willow Glen (San Jose)

SoCal Blogs
Claremont
Long Beach
Pasadena
Rancho Santa Margarita
San Diego
Santa Clarita

Other Areas
Tahoe
Sacramento

Jazz on the Plazz
Enjoy Cool Tunes on a Hot Summer Night

Two-time grammy winning Diane Schuur belts out the grand finale of Jazz on the Plazz tonight at the Los Gatos Town Park Plaza. Get there early with your cooler & lawn chair, as this immensely popular singer will fill the park to capacity and then some. The show runs from 6:30 - 8:30.

Music in the Park - Season Finale
with The Joe Sharino Band

Determining Probable Market Value of a Property

Thinking of selling your home? One of the first questions a potential home seller has is this: "what's my home worth?"

Real estate professionals will establish the probable buyer value (do a market analysis) by comparing your home to others like it which have sold recently and perhaps also those which are currently under contract (sale pending). These similar homes are called comps (for comparable sale). They factor in market conditions as well (buyers market, sellers market, inventory shortage or excess).

What is an ideal "comp"? It is a sold home that is:

• recent (within at least 6 months, but preferably 3, similar market conditions)
• nearby (same zip code/town, within a mile is best, within same complex or subdivision is ideal)
• similar type of location (interior lots vs one backing to a freeway, school, high voltage lines)
• like condition (similar amount of updating/remodeling)
  
  In a tract subdivision or condo complex with many recent sales, this can be easy. If the subject property is very similar to several recently closed sales except for either the level of improvements or the lack of them, an adjustment would be made only for the condition. In my experience, the same tract house may have a range of 10% - 15% of value between completely original and not well maintained to thoroughly remodeled with high quality appliances and upgrades. (Most homes are somewhat updated. Few are either enitrely or original, or even more rare, completely run down.)
  
  Let's do an example of a tract home in which there are several sales nearby of the same floorplan in recent months. And let's say that a typical home there, somewhat updated, sells for $1,000,000 just to use a round number. The numbers could break down along these lines:
  
• typical sale, moderately updated $1,000,000
• same floorplan, mostly original condition $900,000 - $950,000 "depending" (very original to run down could go lower, depending on market conditions)
• same floorplan, thoroughly remodeled, turnkey $1,050,000 - $1,100,000 "depending" ("stunning remodel" could go higher depending on market conditions)
  
  The range of values is often 10% on the same street, but it could be as much as 15% or more if you have a difference of more than just condition (lot size, precise location, a change in market conditions between one sale and the other). As an example, if all the comparable properties were "all original" and your home is "somewhat updated", it's likely that your home will sell for 5% more than the others did because of your updates. The range between "all original" and "stunning remodel" is not usually more than 15%.
  
  It is much, much more difficult to establish market value for a home when there are no good comps. Sometimes the property being evaluated is extremely different from those sold recently & nearby.
  
  To establish a probable market value, it again will be a matter of adjustments, but when there are no good comps, a lot of adjustments must be made. Real estate professionals will adjust up and down for condition, location, the market's behavior etc.
  
  The most important factor is always location. If a home is overbuilt for the neighborhood (too improved or too big for the area), the nearby homes will pull that home's value down. If a home is modest for the neighborhood (on the small size compared to others or not as improved), the nearby homes will pull that home's value up. If the comps are in a better school district than the subject home, it will be necessary to adjust downward for the schools. If the subject's lot is the largest in the neighborhood, adjust up for the neighborhood.
  
  On these hard-to-comp homes, often it is important to arrive at probable market value from several approaches. One approach might be "what does the neighborhood carry?" another might be "what would this home in another neighborhood sell for" (and then adjust for area), or "what would this home have sold for last year" (and then adjust for what the market has done since then). By trying to establish the value from several angles, it can become clear that the home is likely to sell within a particular price range.
  
  Finally, homes are seldom worth just one price, because when a property sells it's about both price and terms. By terms, I mean other factors that can influence how much a buyer will pay and how much a seller will take.
  
  For example, these terms might sway a seller to take less money:
• an all cash offer
• an as-is offer
• a quick close of escrow or a long close, depending on what the seller wants or needs
• a free rentback for the seller
  
  And these terms might cause the seller to get more money for the property:
• the seller carrying the financing
• the seller accepting a contingent offer
• the seller offering a lease-option to buy
• the seller including personal property with the sale
• the seller providing some other incentive (e.g. paying for closing costs)
  
  In one multiple offer situation, a seller client of mine opted to take the offer at the lowest price because it was an all-cash deal and a 5 day escrow. It was a "sure thing" and my seller wanted the house closed more than the seller wanted top dollar. That is not usually the case! Things like that can "throw" a comp a bit, so when factoring in a probable market value of a home, it is important to consider any conditions impacting the sale price, such as these terms. If one comp looks radically different than other similar sales, it's probably a result of the terms of the sale and not really market value per se.
  
  If you would like to know the likely market value of your Los Gatos or Silicon Valley home, please contact me. I'd be happy to run the numbers for you. Send me an email with your address and contact information or fill out my online market analysis request form. It would be my pleasure to assist you.

Crime in and near Los Gatos

Los Gatos enjoys a tremendously low crime rate overall. Sometimes I chuckle to read The Weekly's blurb on the police reports. It usually includes a few drunk-in-publics, a DUI, theft out of an unlocked car, and a domestic dispute or two.

Usually, crime in Los Gatos is very minor. It's not nice, it's disheartening, but it's normally very small.

In the past, I have mulled over discussing some of the seedier things that happen in Los Gatos but didn't think there was anything to learn from the topic. It's obvious to me that drunk driving is wreckless and innately immoral, and I didn't think I had anything new to add to the topic.

Los Gatos IS a safe place to live. Probably one of the safest. But that doesn't make The Cats immune, and it doesn't mean we should be so casual as to invite trouble. And I think the latter point is something that should be addressed as many of us are complacent as we relax in the safety of our town.

Today is a case in point. Sadly, early this morning, on the Los Gatos-San Jose border (right near where I just sold a duplex) a man attempted to kidnap a senior woman as she was walking close to the Los Gatos Memorial Park on Los Gatos-Almaden Road. One side of Los Gatos-Almaden Road is San Jose and the other is Los Gatos.

Luckily, this woman refused to comply with the jerk's command that she get in his pickup truck. She did end up getting hit or slapped, but of course it could have been much worse.

What can we learn from this?

No matter where you live, no matter how safe your zip code or area might be, it pays to pay attention, to have your wits about you. It's a good idea to be able to defend yourself too - this is particularly true for those of us in real estate, who may sometimes be in homes with folks we don't know too well.

Even if you live in Los Gatos, Almaden Valley, Monte Sereno, Saratoga, Los Altos or any other "high end" (low crime) area, don't invite trouble. Lock your homes and cars. Don't leave bicycles, scooters or other valuables out in the driveway. Pay attention to your surroundings. Keep your eyes open. Tell your neighbors if you see something unusual or suspicious. You're not being nosy, you're being a neighbor.

Fogging for West Nile in Part of Los Gatos Tonight

How Can the Subprime Mortgage Mess
Impact You in Los Gatos?

Here in Los Gatos and in Silicon Valley, Countrywide is a mortgage company - it sells loans. You don't see Countrywide Bank on street corners here or anywhere in northern California. Recently the lending institution, Countrywide, known to all of us, was "downgraded" and some economists are not seeing a cheery future for that company. Last week, the LA Times wrote that  it went from bad to worse as there was a bit of a run on Countrywide bank in southern California. Public vote: no confidence.

How can that impact you?

Countrywide is the largest provider of home loans in the nation. It is having to make fewer and fewer loans (more so now that it had to borrow money to cash out some customers). In short, the money supply is tightening - even more.

With real estate, it is all about supply and demand. Home buyers are really purchasing both a home and a loan (in my career I've worked with two "all cash" buyers in 14.5 years). When the money supply shrinks, it gets more expensive. When loans become increasingly costly, it puts pressure on housing prices. Think of it as the balance scales - to a degree, if one side goes down, the other goes up. If interest rates go up, prices may come down. (So buyers who are waiting for homes to become cheaper, take note that if they do, your loan will likely cost more - savings not guaranteed.)

Most recently, the subprime mortgage mess has impacted first time homebuyers and low income buyers the most. In the last several years, very few first time home buyers have been buying with 20% down. It's too hard to save that much money, especially as prices have risen much faster than a buyer's ability to save.

So what we've been seeing is that now move-up homes are selling much better than entry-level homes because those 100% loans are so hard to come by. East San Jose, which has more affordable housing, has been very adversely impacted by the loan fallout and houses there are generally "sitting" and not selling.

So back to you. How does this impact you, if you are buying or selling a home today?

Lenders are nervous. They are making the loan process a lot more difficult and time consuming as they scrutinize every buyer to make sure that he or she is a good risk. It used to be easy, with a pre-approved buyer, to get the final loan approval within a week. No more. Allow a few extra days.

If you are selling, understand that even with a pre-approval, your buyer may need an extra day, two or three. If you are buying, get everything to your lender on double time. If you are not yet in contract to purchase a home, be sure you've cleaned up your credit, don't make any big purchases, and do your level best to assemble 20% down (which has to be "seasoned" in your bank 3 months for the lender to count it).

If you do not have 20% down, you are at risk for the lender to change its mind, even if you are preapproved and ready to close escrow soon. In recent weeks, I'm hearing from other agents that fully pre-approved buyers have had their loans rescinded. Why? How? The lender decides that the buyer is too much a risk - finds a technicality and backs out a few days before closing.

My advice is to "double-ap" the loan. Submit it both with the lender who's promising the better rate AND one who's more of a sure deal (even if at a higher rate). Think of it like college applications: you apply to the school that's a sure thing, that's a probable thing, and a stretch - because you don't want to be without a school when September rolls around.

First time buyer? Getting an 80% first, 10% second and 10% down loan is not the easy approach it was awhile ago. If you have parents who are offering to lend you part of the downpayment, talk with your mortgage broker about this option. For many, the door is closing on 80/80/10s just as it has on other less-than-conventional loans. Home sellers will feel better knowing that you have 20% or more because you are less likely to have your loan withdrawn.

This has been a rough week in the financial market. The Federal Reserve cut interest rates on Friday to its Discount Rate by 1/2% in an effort to help. Was it enough? No one knows right now. Things are jittery all over.

I remember, as a teen, my mother (a Realtor) selling homes when interest rates were 18%. It wasn't fun, but somehow people did still buy and sell. When Jim and I bought our first home in 1989, we had an interest rate of 10.25% and paid 2 points to buy it down that far. We still bought, and so did everyone else. Houses were cheaper then, but the money wasn't.

My final words? If you are ready to buy, buy now - if the economy gets rocked, interest rates will rise and no matter how cheap the housing may get, your loan then will likely eat any difference. If you own your home free and clear, you might consider selling now, and maybe offering to carry some or all of the mortgage. If you can provide some financing, buyers will flock to your home. 

Want to buy a home? Save, save, save. My lender friend, Debi Merchain, calls it "power saving". In this kind of market, the old adage is really true: cash is king.