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 We read about the real estate market being a buyers market, and some folks think that means that houses, condos and townhomes will always sell for much less than the asking price.
That just isn't the case. There's a whole lot of "it depends" going on. Take each property on its own merits, do some homework and strategize how to get the best deal when buying a home.
Some sellers, for example, deliberately underprice their homes to attract multiple offers. This, of course, pushes the price up and the sellers are often very pleased with the results. (It is usually far more effective than "testing the market" with a high price.) So if it's underpriced, don't assume it'll sell for less.
How should you evaluate Los Gatos real estate when you're thinking of writing an offer? I go through this with my clients all the time, so let me give you a few tips here.
 First, make sure you understand the current market conditions for the area and price point you're interested in. I put out a monthly Real Estate Report (about the 10th of each month) that will help you understand the city or region - such as Los Gatos/Monte Sereno, Saratoga, or districts of San Jose like Cambrian Park. But there are lots of micro climates in real estate, even within a town or a zip code! So before writing up a purchase agreement, look at comps and ask your agent to help you understand what's happening locally. You'll want to know both the list price to sales price ratio and also what homes are generally selling for in that particular neighborhood. Once you know those two things, you adjust for things like improvements, condition, precise location, and other issues.
- In the Town of Los Gatos, homes are selling at an average of 97.7% of list price. How will sellers feel about offers that are at 90% of list price or worse? You're right if you guessed that they'd be insulted and upset.
- Upset sellers don't tend to be cheerful in negotiating; trying to get a "killer deal" may prevent you from getting the house at all!
- When a lowball offer comes in, most often, sellers give a high counter offer. (What constitutes a lowball offer varies, but 10% below list is usually taken badly by the seller.)
Second, learn as much as you can, before writing an offer, about the home's condition. Find out if there are disclosures, inspections and reports online. If so, read them first to get a true picture of the property's condition. If it's in great shape, it will be worth more, and if there are a lot of repairs, it will be worth less. No resale (or used) home is perfect, so do not expect a 45 year old home to be flawless. (I often see this mistake: buyers will view homes at the top of their price range and when they find flaws in the home, start subtracting based on their budget rather than based on market value.) Do consider how it compares to others like it on the market, that are pending sales or recently sold in terms of condition. The best agents do all this upfront, or at least as much as possible. If you happen to be viewing a home that is a short sale, it is highly unlikely that the seller will have any inspections...because there just isn't any money with which to do them.
 Third, ask upfront, through your agent, what the seller wants or needs to be happy. It could be price, it could be terms. (Terms are the other important aspects of the offer such as required repairs, length of escrow, things included or not included.) You may or may not be able to give it to the seller, but knowledge is power and often the price may be lower if the terms are more favorable. If the seller needs a quick close, you may be able to buy the home for less if you can move fast. Same with "as is" or other clauses that make the seller's life easier. Seniors often have a difficult time clearing out their property, so if you, as a buyer, offer to take on the seller's old cans of paint or other "headache" items, you may create a sense of ease and goodwill that may result in a better price for you. I have seen this happen many times!
With this third point, I should stress that some agents will not want to take the extra step and pick up the phone to talk with the listing agent. There are some agents out there who never call, but simply fax over an offer. To the better, more professional agents, this is really annoying and smaks of laziness and non-professionalism. Listing agents want to know when an offer is coming in. They may tell your agent important information that enables you to write a cleaner offer (that perhaps will not need a counter offer if it's right the first time.) Please make sure that your agent will phone ahead, do a basic inquiry and make a good impression of you to the listing agent and seller. Transactions are about people as well as business and this is an important aspect you should not ignore.
In today's market, which varies wildly from one zip code and price point to the next here in Silicon Valley, goodwill still goes a long way. So let me add a few closing tips:
- If you happen to meet the seller, try to be friendly and respectful - sometimes if the seller simply likes you, it can go really far in making the transaction together (remember, buying and selling is emotional and not just a business deal!).
- Make sure you hire an agent who will also try to put a best foot forward for you. If there are multiple offers (which does still happen!), it may come down to whom the listing agent feels best about working with. Reputation matters, and so does the agent's professionalism.
- If it is multiple offers, and there are disclosures online, read them, sign them, and turn them in with your offer if at all possible. The seller and listing agent will know you are not going to be surprised later and back out. Even if it's not multiple offers, the seller will feel more confident if he or she knows you have read the inspections and truly understand what you are trying to purchase.
- Most Realtors in Los Gatos will be looking for a 3% initial deposit and a pre-approval letter from a reputable source (not an online entity). In some parts of Santa Clara Valley, smaller deposits are the norm. In Los Gatos, 3% is strongly preferred and at the least will be expected when contingencies are removed.
- Write a letter. Make nice. Tell the seller why you like their house.
- Is the house really overpriced? If so, have your agent politely explain the reason behind your offer price.
- Is the house not overpriced, but not selling and you can only afford so much? That kind of honesty can work too. Just tell it like it is. Talk to your Realtor, but something like "Mr. and Mrs. Seller, I realize that your home is worth XYX amount, but unfortunately I don't qualify for that much. I would like to buy your home, but the most I can afford is XY amount. In turn, we'll take it as-is and do a three week close, and give you a one week free rent back, and we sincerely hope you will consider our offer...."
 Stories float around Los Gatos, Monte Sereno, and Saratoga of transactions that never came together because the buyer insulted the seller. About 10 years ago, I had a listing and an offer got faxed in (no phone call) and it was just an awful, lowball offer. The purchase agreement was 10% below list price and had a ton of bad terms in them. My seller ripped the offer into quarters and took the house off the market. And there was one story I heard, a few years back, of a buyer who asked the seller to leave the family's dog too. The seller was angry and would not sell the home at any price!
The average and median prices are helpful to understand what's happening overall. Any home, though, may be different from the average or median, and the sellers may have different circumstances. If you'd like to get a great price on a Los Gatos home, follow the above guidelines (and begin by hiring your buyer's agent carefully!) and you will greatly improve your odds for success!
Call or email me for assistance in buying your next home in Los Gatos!
Mary Pope-Handy, Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS, ACRE
Helping Nice Folks to Buy & Sell Homes Since 1993 - 15 Years Experience!
Co-Author: "Get The Best Deal When Selling Your Home In Silicon Valley"
Keller Williams, Cupertino, CA (Serving Los Gatos, Saratoga, Cambell, San Jose's communities of Cambrian Park, Almaden Valley, Willow Glen, and all of Silicon Valley)
877 397-5391 (Direct/Toll-Free/Fax); 408 204-7673 (Cell)
www.DelightHomes.com www.ValleyOfHeartsDelight.com
email: Mary (at) PopeHandy.com
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Los Gatos Home Sales Trends
The following chart shows median and average price trends plus sales in the Los Gatos real estate market of single family homes (this is for the zip codes 95030 and 95032, not the mountain areas of 95033). The chart uses a 12-month moving average to eliminate any seasonal variation. Note that overall, prices of sold homes continue to rise, even as the number of sales has been declining.
The next chart is the same as above but uses a 3-month moving average. This smoothes out month-to-month variations yet shows seasonal variations. What is unusual here is that the number of sales is not rebounding as much as is seasonally normal.
This chart shows the current inventory of homes for sale compared to the number that have sold. The larger the gap between inventory and sales, the harder it is to sell, of course. So it is a little amazing that prices are rising at all.
The next series of charts shows the same real estate data as above but for condominiums and town homes in the Town of Los Gatos. As you can see, it's a little harder on the condo and townhome market in Los Gatos. Prices do not appear to be rising in this segment of the market.
For detailed information on specific homes or neighborhoods, contact me.. And to see more neighborhoods and more data, please visit my online report: http://www.rereport.com/sj/winmph/
Data collected from MLSListings.com (REInfolink), compiled by ReReport.com - used by permission (I am a subscriber)
Mary Pope-Handy
Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS, ACRE
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Date: Mar. 10, 2008
Tags: San Jose Mercury News, Los Gatos, San Jose, Real Estate, El Dumpo, Fixer, Fixer Upper, Cosmetic Fixer, Bulldozer, Dozer
The San Jose Mercury News was a Realtor's close friend in the 50s, 60s and 70s. It was more current than the multiple listing book (which at that time was updated about once a week with tearout or replaceable pages) and scanning the ads was crucially important to know what was going on back then. Each morning, my mother, Pat Pope (a Realtor from '56 to '96) would pour over the Merc with her morning coffee to stay current on the market.
 Most of the ads were pretty plain. One stood out for its frank humor - and it ran for what felt like years. The "old timers" in the industry may remember it. In large letters, this San Jose fixer-upper was listed boldly as "EL DUMPO". It eventually did sell but while being marketed, gave a lot of folks the chuckles.
So what makes a home a "fixer"?
In my real estate practice, I find that buyers, sellers and agents can all have a different idea of what constitutes a "fixer". It comes down to a matter of degree.
Simply put, a fixer is a home that needs a lot of work.
At one end of the spectrum, there are homes that have been updated now and then over the years - perhaps with a kitchen remodel that's now 20 or 25 years old - but not recently. The carpet and paint need replacing and the look could be newer, but the home is well maintained and clean. Is it a fixer? The sellers won't think so and may be offended if that label is applied to their home. The agents may view it as borderline. Buyers may view it as "liveable but needing work". Or maybe not - perhaps they will wonder how the current owners could live in a home with that condition. They may consider it a fixer.
 At the other end of the range is the "bulldozer". These are homes that have not been kept up at all: not updated, not even cleaned. They may have dysfunctional floorplans, illegal additions. They may need more than fixing; they may need replacing.
Once when my kids were out of school (vacation or inservice day) on a real estate board tour day, I took them along with me to see a few homes. We pulled up to one in Monte Sereno. The structure was sitting on a perflectly flat view lot close to Daves Avenue. The house was the kind of thing that makes a person say "ewww" when opening doors and seeing unpleasant, moldy surprises. My daughter, then about age seven, saw it and proclaimed wisely "Mommy, it's a 'dozer'".
Here are the types of things that will make virtually all buyers and Realtors view a home as a "fixer" (not just one of these, but multiple issues):
- major systems in need of being replaced, such as the roof, electrical system, plumbing, heating
- floors badly out of level (foundation work needed, drainage work needed)
- baths and kitchens that are 40 years old
- fireplaces and chimneys that need rebuilding or extensive repairs
And here are a few more that may invoke the "fixer" label (or the milder "cosmetic fixer") among homebuyers and real estate agents:
 popcorn or textured ceilings - paneling or (most older) wallpaper on the walls
- single pane windows
- cracked and stained concrete - driveways, walkways, patios
- lack of in-ground sprinklers
- ugly landscaping (obviously a little subjective)
- baths and kitchens more than 20 to 25 years old or in out-of-date colors
- old (or stained) carpeting or other floorcovering
For agents, it's helpful to clarify with buyers what they mean when they say "I want to buy a fixer". They may mean "replacing carpet and paint is OK" but nothing else. Or they may be willing to tear down a house and rebuild a new one for the right lot and location.
 For buyers, it's important to be clear with your agent what kinds of things you'd be willing to do for the right price, and how much is too much.
For homeowners who may be thinking of selling, don't worry about completely updating your house because someone may view it as a fixer upper. You won't get your money back in the short term if you replace your kitchen cabinets, for instance. But it's a mistake to take the stance that "the buyer can fix it" for everything extreme. Many buyers cannot envision how nice your kitchen would be without the brown and white flowered wallpaper and without the brown vinyl or linoleum flooring. Some fixes will make you money when you sell and some won't. Floorcoverings and paint are often a good investment.
Please call me if you'd like to discuss your particular situation and how to maximize buying or selling a home that may be a fixer.
Mary Pope-Handy, Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS, ACRE
Helping Nice Folks to Buy & Sell Homes Since 1993
Co-Author: "Get The Best Deal When Selling Your Home In Silicon Valley"
Keller Williams, Cupertino, CA (Silicon Valley)
877 397-5391 (Direct/Toll-Free/Fax); 408 204-7673 (Cell)
www.PopeHandy.com www.ValleyOfHeartsDelight.com
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We all like easy answers, preferably with a short list. That's why titles like "Five Easy Ways to Make Millions" seem to sell so well. With that in mind, let me provide a few very simple rules of thumb for staging your Silicon Valley home to sell in any real estate market. But let me warn you: I'm going to be painfully, brutally blunt.
The first rule for "staging your home to sell" is the topic of today's post and it involves landscaping and curb appeal. The front of the house needs to look great. Seriously. If the front doesn't look wonderful (or at least really good), the buyer will never go inside to see how great your home is. Especially now, when the majority of homes are not selling.
Here's Mary Pope-Handy's "Simple Rules for Landscaping to Sell Your Home":
 Get rid of juniper. I'm not kidding. And ivy too, while you are at it. These two plants are hated by most buyers and tend to give them the sense of "if they've lived with that, what else have they lived with?" There are front yards which consist of nothing but ivy and juniper. Tear it out. - Make sure the door(s) and windows are fully viewable and not at all obstructed from the street. This is dual purpose. First, it allows the buyer to see the home as uncrowded from the outside, and it lets a maximum of light get inside. If your bushes are growing over any part of the window, beat it back. I mean, trim it back. Mature landscaping is good. Overgrown is bad.
- Have a healthy lawn in front. Fresh sod is nice, but a nearly weed-free, inviting patch of green will do. (In ground sprinklers required. Timers and auto drip a plus to buyers.)
- Plant colorful flowers near the walk way and near the front door.
- If you have a porch, make it appealing with good furniture - but not overcrowded. Think uncluttered. If it's a tiny porch, use tiny bistro-like furniture.
- Keep garden hoses rolled up and tidy, keep walkways clear of debris, keep all the living things healthy (unless you've got moss - get rid of that living thing!).
- Clean your windows, door, porch, exterior. A power washer is a good friend - it'll help you clear cobwebs. Make sure the door opens easily and the hardware is clean.
- How's your mailbox? If it's tired, replace it. Ditto that for the front mat.
- When selling, make sure to keep your garage door closed (and that it operates properly). If the driveway, walkway or sidewalk is badly cracked or damaged, consider repairing or replacing it. This is particularly true if there is any tripping hazard. (Imagine a buyer getting hurt while viewing your property - you want to eliminate this possibility.)
That's it for the exterior. Not too painful, was it? (Well, not if you didn't start with a heavy load of juniper and ivy.) If you can make your front yard approachable and welcoming (no walls of ivy, no overgrowth), it will do wonders at beckoning people to see the inside of your home too.
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 Lately, in my practice as a Silicon Valley Realtor, I've been showing a lot of short sale houses and a few bank owned properties (known as REOs or "real estate owned" by the lender). They have been in entry level, single family homes close to $500,000 in Blossom Valley, Santa Teresa and south San Jose. In fact, the majority of homes that I've been showing there consists of distressed sales. Since that is the case, it is pulling prices down in those areas very dramatically. Homes bought two years ago for about $640,000 are now selling for about 80% of that recent sales price.
That's not happening in Los Gatos.
Yes, our prices are soft and inching down a bit, but not by 20%. If you own a home in any part of town, that should make you happy. If you are trying to buy a home in Los Gatos, that may not seem like good news at first, but actually it is - for the long haul. It's good that our values are more insulated than that.
There are a few pre-foreclosures here, a few going to auction, and a few that are bank owned. (Those are the three main stages.) Can a real estate agent, preferably a Realtor, help you to buy one of them?
It depends. If you are an investment buyer, and don't intend to live at the property you are purchasing, and the home is owner occupied, and a notice of default has been filed, the answer is no. This is a consumer protection situation, intended to keep a distressed homeowner from suffering at the hands of unscrupulous, wealthy buyers.
If you are planning to buy and live at the residence (a 1-4 place such as a duplex, triplex, fourplex, condo, townhome, patio home, or house), then an agent can assist you with either a pre-foreclosure purchase OR a bank owned sale. There is really no role for a Realtor in helping you buy at auction.
Let's talk about the three main stages:
(1) Pre-foreclosure: the homeowner is unable to continue making payments to the bank or lending institution. This may be due to illness, job loss, divorce, or other problems. The owner may or may not have had a "Notice of Default" filed. If the NOD has been filed, the clock is ticking and a "trustee" at the bank has begun foreclosure proceedings. If not, you only have to worry about the loss mitigation department. The two divisions may or may not be talking to each other, so it gets trickier after the NOD has been filed, (If there is a NOD, it is recorded and may show up on a preliminary title report or property profile.)
If a seller wants to sell during this time, a real estate agent can help by listing the home at a realistic price and procuring a buyer. Hopefully, the home can sell, the debt can be paid in full, and the owner's credit is not harmed.
Often sellers will contact an agent to sell the home, but sometimes they don't. For whatever reason, most owners in trouble never call the lender at all (big mistake, the lender could potentially wait for a few payments, called forbearance, or modify the loan, but without placing that call, it will surely go from bad to worse). But a large portion of sellers in trouble do list their homes and they can be found on the regular multiple listing service, or MLS.
Sometimes, sellers need to unload a property but the market will not bear enough to pay the bank off. That's what I've been running into in parts of San Jose. In those cases, the home goes on the market as a "short sale" and the agent tries to assist the owner in obtaining permission from the bank to sell and tranfer home without the bank being paid off in full. This is a short sale (and it does damage the seller's credit, but not as much as a foreclosure).
The vast majority of short sales do not go to closing, but proceed to foreclosure. The reasons are enough to fill a book, but sometimes because the homes are overpriced and sometimes because the bank does not respond fast enough. Some lending institutions are better than others. In one case I heard about recently, a listing agent obtained an offer just 1% below list price, but the lender took 3 months to respond. By that time, prices had dropped between 5 and 10% in that neighborhood, so the buyers no longer wished to pay the amount they originally offered. The list price was then dropped by about 8% and the agent had to obtain offers all over again. Who lost? The bank lost more than anyone else: a straight 10% cost for dawdling. (In fairness, they are massively understaffed and overworked. They are kicking themselves by not hiring more qualified people to stem the losses).
So a Realtor could help a buyer in this short sale scenario - to a degree. A buyers agent cannot make the bank hurry up and respond. The buyers agent cannot even talk to the bank. The listing agent may do so only after the seller has signed an authorization form. So there's some frustration and a sense of being out of control that goes with the territory.
 Many listing agents don't know how to do short sales. I cut my teeth on a few in the early 90s and they weren't a lot of fun. But now there are huge numbers of them so it's a different game. In response to this crisis, a new business has emerged: short sale intermediaries. These folks have created a niche market of doing the go-between from the agent to the bank. They are the ones who stay on hold half the day, who specialize in knowing what the lenders need and require before someone actually verbalizes it. Because they specialize in this, their closing ratios are far higher (but still not guaranteed). (Call or email me if you would like more information on this.)
(2) Auction: if a home doesn't sell in pre-foreclosure or as a short sale, then the foreclosure process moves forward and the home will be offered for sale at auction. An agent can't help you here. If you wish to purchase a home at auction, realize that it will be offered at a price to cover all leins or debts, and it is often placed at a price the regular market will not bear. The auction situation presents special difficulties too. First, you cannot inspect it - you may look from the outside, but that is it. Second, unlike with the first or third scenarios (pre-foreclosure or bank owned), there is no contingency period in which you can change your mind and back out of the deal. Third, you need cash! And fourth, if you buy it and it is still occupied by the former owner or tenants, you will be responsible for the eviction process. For all these reasons, homes rarely sell at auction. They usually move on to REO, and are back on the market, placed on the multiple listing.
(3) Bank owned properties offer the opportunity to inspect but do not provide most disclosures since the bank is not a seller who's lived at the property. When a property is REO, an agent will handle it very much like a regular listing and it will be available to view. Banks are highly motivated to unload these properties but like any seller, will not go for an offer half the value of the property. Homes are virtually always sold "As Is".
If you are wanting to buy a home in Los Gatos, and you want the help of a real estate professional, that is possible with the short sale or preforeclosure situations, and it is possible with REOs too. There are not a lot of these distressed properties on the market here right now, but there are a few and some of them are quite nice and are listed on the MLS. There are pros and cons to buying at each stage, risks and benefits. If you attempt to purchase a short sale, realize that you may or may not be able to close - through no fault of your own. If you buy a bank owned home, you may not learn everything you'd have liked to know (for instance, if there was a death on the property, problems with neighbors etc.). And understand that a Realtor cannot help you at auction, or if you are an investment buyer trying to purchase an owner occupied home in which a notice of default has been filed.
Would you like to talk more about buying or selling your home? Please call or email me. I'm here to help.
Mary Pope-Handy, Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS, ACRE
Helping Nice Folks to Buy & Sell Homes Since 1993 - 15 Years Experience
Co-Author: "Get The Best Deal When Selling Your Home In Siicon Valley"
Keller Williams, Cupertino, CA (Silicon Valley)
877 397-5391 (Direct/Toll-Free/Fax); 408 204-7673 (Cell)
www.PopeHandy.com www.ValleyOfHeartsDelight.com
Mary@PopeHandy.com
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A few days ago, I did a post about the biggest, most common mistakes sellers make that cause their homes to not sell. The # 1 error is overpricing, and often that's connected with hiring an agent who tells you what you want to hear instead of what you need to hear (or sometimes it's the agent not understanding the market and accidentally misguiding the owner).
Are prices rising or falling in Los Gatos? Both! It depends on what part of town, what price point, what school district, you are considering. We don't have just "one market". It is imperative to understand the micro-markets to get the pricing right.
So let's look at "the market" and "the markets". Let's have a look at the information that homeowners are using to determine how to price their Los Gatos (or Saratoga, or San Jose) home. Below, see a general view of the "Los Gatos Real Estate Market" for single family homes (very broad, including two zip codes and even more school districts). This is relating to list price, not sold prices.
Would this help you to understand pricing trends? To a degree, yes it would.
But it would also add a lot of insight to see how the market is performing within zip codes:
As you can see, there is a vast difference in performance between the town as a whole and the 95032 zip code.
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What is going on here? Clearly, the 95030 part of town shows rising list prices, while offered amounts in 95032 have been falling. The zip codes are a little different demographically, with 95030 being more expensive and being all within the prized Los Gatos School District. Some of 95032 is in that same district, but some is assigned to the Union School District or the Moreland School District. (Unfortunately my data is not available by schools.)
Another point to consider is the pricing range. Here's a view of Los Gatos single family homes by listed price quartiles:
The town overall appears to be "flat". But is the market really flat?
And let's see again the quartiles, but this time broken out by zip code:
In 95032 you see a distinct slide in the 2 middle percentiles especially, but also in the lowest range of homes.
Now let's see how things look in 95030:
In contrast, pricing are rising across the board in the 95030 area. The highest cost homes have suffered the most volatility in the market.
For months, we've heard that we have a "bifurcated market" here in Silicon Valley. We know that homes in east San Jose, south San Jose, and south county are under a huge oppression of short sales and foreclosures. Prices have fallen dramatically. At the same time, homes in Palo Alto and areas closest to it are experiencing a strong sellers market. Los Gatos does not have a ton of short sales or foreclosures, but it does have both a buyers market and a sellers market all at the same time.
The above chart looks like there isn't much movement, just a slow and gradual upward push...but have a peek along the quartile lines and you'll see it's not really flat. Here's a view of the 1st quartile of each zip code over the last year (I'm not going to run all 4 here, contact me if you want more info about a different price point):
and ...
If a home is "in the schools" and has no issues (like high voltage lines, train tracks, busy road, or a disfunctional floorplan), and if it's priced between one and two and a half million and is priced appropriately, marketed well etc, there's a good chance it's going to receive multiple offers.
If a home is NOT in the Los Gatos School District, prices are falling and buyers are probably waiting rather than buying in most neighborhoods.
To complicate matters, we have very few solds to use as comparable properties. If agents and sellers are using "comps" from 6 or 9 months ago (when the last similar home sold), they might be too low in 95030 and too high in 95032 (mostly along school lines, in my experience). It is imperative to adjust for market conditions. For example, if a home was worth $1,500,000 last March (since the charts begin there), it has possibly swung up or down in value by $100,000 to $200,000 depending on the area of town.
Warning: if you are in an area where prices are falling and you list your home too high, you may experience the unpleasant phenomena of "chasing the market down". A Realtor friend of mine from Long Beach, Laurie Manny, did a post on this topic that I highly recommend: "Chasing the Market Down - Are You Guilty?"
What is the market in your area of town doing? I would welcome feedback. Are homes selling, and if so, are they going fast? Are they "just sitting" and taking price reductions? What do you see happening in your area, with your type of property? Feedback is posted immediately - please chime in!
(Coming soon - a similar post on condos and townhomes in Los Gatos.)
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What are the odds that a home in Silicon Valley
will sell right now?
Most of the homes for sale in Los Gatos, San Jose, or anywhere in Silicon Valley are not going to sell this month. In Los Gatos, there's about a 20% chance than any given home will sell. In San Jose generally, it's a lot worse than that - it's about a 13% chance that a home will sell. Here's a quick look at the numbers for these two areas of Santa Clara County:
Los Gatos Single Family Homes (95030, 95032 zip codes)
Active Listings (For Sale) = 118
Pending Sales (Under Contract) = 23
Closed in Last Month = 18
Months of inventory = 6.5
San Jose Single Family Homes (all areas)
Active Listings (For Sale) = 2921
Pending Sales (Under Contract) = 405
Closed in Last Month = 196
Months of inventory = 14.9
The months of inventory, or absorption rate, is a simple calculation of the number of active listings divided by the number of closed sales in the last month. For Los Gatos, that figure is 6.5 months. For San Jose, it's a whopping 14.9 months. (The National Assn. of Realtors says that at 6 months or more, it's a buyers market.)
What is also good to measure, though, is the pending sales against the listing volume. In Los Gatos, you can see that the number of pendings is a little higher than the number of closeds. But in San Jose, it's more than double! This tells us that the market IS improving. But it's far from being an easy time to sell. Depending on your area and price point, there's an 80-90% chance that your home would not sell this month.
How Can A Seller Improve the Odds
of a Home Selling Now?Prospective Los Gatos, Saratoga, and west valley sellers - what can you do to improve your chances of selling?
Here's a short list of the most common seller mistakes, things NOT to do:
 (1) Hiring an agent based on the list price he or she suggests (going with the highest number) is the biggest and perhaps most common error. A better practice: interview agents, hire someone, and then together work to establish the probable buyer's value of the home and work out a pricing strategy from there. It's fine to discuss pricing with the agents you interview, but do not choose your agent based on pricing, but rather on references, marketing, negotiation ability, experience, and other criteria.
(2) Related to #1 above, a common mistake among sellers is pressuring your agent to tell you what you want to hear rather than what you need to hear. Some sellers believe that if they "sell" the agent on the higher value of their home, or the current condition (which might need some changes to net you the most money), the house will sell for more, and sometimes homeowners actually push agents to state their estimated value higher than is realistic. One key job the real estate professional has is to provide you with objective input on your home, both at the time the listing is signed and as the feedback comes in and the market conditions possibly change. Ultimately, only you can assign the list price on your home. Allow your agent to provide you with objective input so that you can make a good decision.
Put another way, sellers often have an inflated view of what their own home is worth on the market (this is true of agents selling their own homes, by the way). And sellers take it personally when they believe a home is worth 10% more than the agent is telling them it's likely worth. Sellers frequently feel as though the lower price is insulting, and a response spoken or unspoken may be "I'm not going to give away my home". Agents occassionally do underprice a home, but 98% of the time, if there's a pricing error, it's on the high side.
Please remember that your agent is not the buyer on your home, and you are not negotiating a sales price with your agent. You are not on opposing sides of the table. When you hire a Realtor, you are a team and you share the same goal: getting your home sold in today's market.
 (3) Another common error among sellers is simply this: not believing that the market data applies to their home. If the market has corrected X% in the last timeframe, and all the other homes in the area have gone down in sales price, it's also true that your home has gone down in value in the buyers' eyes. Home prices or values are not a lot different than those of shares in the stock market. What a share of stock sold for yesterday or last year is interesting information, but it may be totally irrelevant to what that same share will sell for today. Holding on to what the home "used to be worth" is not going to assist you in getting your home into the minority pool of homes that are selling now.
(4) And finally, a very frequently seen seller mistake that causes homes not to sell is in not utilizing their agent's skills (on pricing of course but also staging, garnering feedback, analyzing the market, etc.).
For example, often Realtors have extra training and experience in staging. Agents know that fresh paint and carpet often will get the seller the most return on the investment, and so will decluttering. Sometimes more is needed in this area too. But sellers don't always want to hear it. The ultimate sales price of the home is tied to a number of factors, including how well it shows to potential buyers.
 Another area to watch out for is feedback. If your Realtor tells you that there's a problem with the way buyers assess your home (pet odors, cooking or smoking odors, clutter or other issues), take it seriously. You will improve your odds by taking the feedback as useful input (and not as an assault). A great system that I use is HomeFeedback.com; the seller can get both individual responses and compiled statistics of the feedback. Sometimes, sellers take it personally and get upset at their agent for the information offered, even via this type of buyer response. This makes it hard to hear what you need to hear.
Put another way, what you CAN and SHOULD do to sell your home in today's market: Hire carefully! (Most agents in the Santa Clara Valley have been licensed less than 5 years and have not been through a market like this. Experience is very important. Check references and be very careful here as it is your single most important decision.) Make sure it's a full marketing plan, using both web and traditional forms of marketing.
Price carefully and realistically! With the vast majority of homes not selling, it is important to not overprice. This is not the market for "trying a price". Price it to sell. Price it to be the best value among similar homes.
Stage it! Listen to your agent.
Take feedback seriously. Estimating prices and what needs to be offered to buyers in the way of condition, concessions or other things in falling markets can be tough. Ask your agent for feedback and take it to heart. Sometimes market conditions are a "moving target" and may require readjusting.
To sell your home in this challenging market for the most money and in the fastest time, the home needs to look great and be priced well and be accessible. Recently I was at a real estate educational seminar and it was put this way: "we're in a beauty contest and a price war".
And lastly, only put your home on the market if you are serious about selling. It's a great time to buy a home in Silicon Valley, but it's not necessarily an ideal time to sell! Rick Campbell, author of The Real Estate Report, opines that we may be "at or near the bottom of the market". Of course, if you are "moving up", the overall is most likely a plus even if you take a hit on the sell side of the equation. So sellers, if you want or need to sell now, make sure that you position your home so that it's not just listed, it's sold.
Mary
P.S. Buyers, don't wait. This is about as good as it gets!
Mary Pope-Handy, Realtor, CRS, ABR, e-PRO, SRES, ASP, RECS, CNHS, ACRE
Helping Nice Folks to Buy & Sell Homes Since 1993
Co-Author: "Get The Best Deal When Selling Your Home In Silicon Valley"
Keller Williams
877 397-5391 (Direct/Toll-Free/Fax)
www.DelightHomes.com www.ValleyOfHeartsDelight.com
emailto: Mary@PopeHandy.com
Blog: www.LiveInLosGatos.com
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