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Real Estate Blog for Palo Alto, Mountain View, California, and Surrounding Communities

• Feb. 19, 2007 - Property Boundaries, or Where to Draw the Line

Disputes about property boundaries are among the most common lawsuits between neighbors in California. Such disputes can be vexing at best, or tragic in the worst situations. Such was the case recently when a homeowner in Carmel Valley shot his neighbor and the neighbor’s wife over just such a boundary dispute. I don’t know how it started, but these were educated, successful people… the murdered couple were both attorneys and the neighbor who shot them was a geophysicist….. who should never have let their dispute become so contentious. 
 
Most people assume that the fence along the back and the sides of their house defines the property boundaries, but fences are commonly off the mark by several inches to several feet. The reality is that most of the time it simply does not matter. The fence may be replaced several times without anybody questioning whether it is exactly where it should be so long as both parties get to use and enjoy the portion they presume to be their yard.
 
Disputes frequently arise when somebody needs more space. This commonly occurs when a neighbor decides to expand their home and the city requires a survey. The survey may indicate that the fence really should be 3 feet closer to the neighbor and the fun begins. This is especially true if that extra three feet or so would put the property into a different category…. one with a7000+ sq. ft. lot as opposed to a 7000- sq. ft. lot. A few square feet of lot size may mean the neighbor can add 200-300 more sq. ft. to their proposed development, so it can become very meaningful.
 
The gracious thing to do, of course, is to concede and help to move the fence. But sometimes neighbors don’t really want the house next door to suddenly become gargantuan, so they may object and decide to have their own survey. Now one would think that would be the end of it. Surveying is supposed to be an exact science, so the surveys should agree. The sad truth is that they frequently don’t, especially if the surveyors cannot locate the “monuments” as described by the original surveyors. If the starting points differ, you can be sure the ending points will differ as well. Here come the attorneys!!
 
Things are even more complicated outside the city boundaries. I always warn my clients, DO NOT assume the fence follows the property lines. If you have any questions at all and if it is important to you, go ahead and get a survey before you buy the house. This is especially true if the buyers are planning to remodel. If there are differences, it is best to approach the neighbors to see if they will agree to let you move the fence or whatever else is necessary so the house can perform the function you are buying it for.
 
Murder and mayhem represent the extreme end of any property dispute, but nobody wants to be on a bad footing with their neighbors, and an ounce of prevention is definitely worth a pound of cure.
 
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• Feb. 3, 2007 - Be Prepared

It happened again!! A first time buyer who recently relocated to this area called me about a house that had just come on the market. We went to see it and it seemed perfect!! It had the desired number of bedrooms and bathrooms, a good floor plan, and an ideal location. It appeared to be in good condition. And best of all, it was in my client's price range. But they didn't get the house!!

In fact, my clients did not even submit an offer for the house, even though they knew and I knew that this kind of opportunity does not come along every day. The problem was not with the house. It was because they were not prepared.

I had contacted them several times to ask if we could meet so that I could review the purchase contract and the basic disclosures with them and explain exactly how this market works, what they should expect, and what would be expected of them. I make it a practice to do this with all of my clients as early in the process as is possible. Unfortunately, in this case we never did get around to it. There were always reasons why we could not meet ..... we are all very busy people, and when you try to juggle family life with jobs and then add in extras (like buying a house) it can be overwhelming. However, when faced with the huge pile of disclosures and inspections, not to mention the actual purchase contract and the short time period in which they had to absorb all of this, my clients simply just could not do it. They were not prepared. And it is a shame.

It does not matter if you are a buyer or a seller. As soon as you start thinking about making such a big move, you should start to prepare for your journey. For buyers, many of the disclosures are generic and non property specific. Those can be reviewed ahead of time so the only new disclosures when you do find a property are the property specific ones. Also, the contract consists of 8 pages of fine print. It is important to understand all of it, and 1 hour before offers are due is not the time to do this. For sellers, there is a lot of preparation prior to putting your house on the market. If you can spread this out over several weeks or months, it is much less stressful.

 "Be Prepared." The boy scout motto we are all so familiar with applies to many faucets of our lives, including the buying and selling of real estate. So, do yourself a favor and start a conversation early with the Realtor® of your choice. You will be happy that you did!!
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• Jan. 21, 2007 - Mortgage Interest deduction

Now that the holidays are over and the football season is coming to a close, it is time to start getting ready for tax season. One of great benefits of home ownership is that interest on loans and property taxes are deductible…. to a point. Gone are the days, however, when all interest on homes loans is tax deductible. Now only interest on acquisition debt up to $1 million plus equity debt of an additional $100,000 is deductible. In most parts of the country, that is considered to be very generous, but in the rarified real estate environment that we live in, here I the mid-San Francisco Peninsula, $1 million will barely buy you a modest (very modest) starter home. So you have to be careful how you structure your loans and how you use the equity portion as well. Many people mistakenly believe that all mortgage interest up to $1 million plus $100,000 is tax deductible, but that is not always the case. Acquisition debt is usually the original (purchase) mortgage amount plus debt incurred to make capital improvements, minus principal reduction from payments already made. So, if you obtained a mortgage of $500,000 to purchase your home, pay it down to $300,000, and then decide to borrow another $300,000 to invest in some income property, it may turn out that only the interest on the first $400,000 is deductible ($300,000 remaining from the original purchase plus $100,000 in equity) and the interest on the remaining $200,000 is not. OR, if you buy a home worth $1,200,000, put 50% down, and finance the remaining $600,000 and later decide to borrow an additional $400,000 to pay off a medical bill, you may only be able to deduct interest on whatever remains of the original loan plus $100,000. Many people who understand that will finance as much of the house as possible… up to $1 million plus $100,000 and save their cash for other purposes. When in doubt, always consult with a qualified tax consultant, as mistakes can be costly and the IRS is very unforgiving!
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• Dec. 11, 2006 - An Insider's View of Selling a Home

I have always believed that, in order to truly understand what it is like to sell a home and buy a replacement home, all real estate agents should be obliged to go through this process at least once. Here is the true story of our own COO and President, Avram Goldman, as he listed and sold his own home:
"Contrary to newspaper opinion homes are selling. I want to let all of you know my home in Rockridge closed last week. I have a great appreciation and empathy for sellers. I have two realities---one as a realtor and one as a seller. The realtor, like a doctor or other professional works with many patients or clients and selling a home is an everyday on-going experience.  For a seller it is an experience that on average occurs every 7 years.  In my case, it was 20 years. It was the home we raised our family in.  And of course as a seller your home is special---and it is.
 
Thought I would share a few observations about my experience. First I would not sell a home without a realtor. Sounds like I am biased. Even as a realtor I wouldn’t list my own home. The experience is filled with too much emotion.
 
I was fortunate my home had an offer even before the brokers’ tour or the first open house. I owe this to my realtors letting me know what I needed to do to prepare my home.  We had all the inspections up front. Even the termite work was completed before going on the market.  They arranged for all the work to be done with gardeners, painters, floor refinishers,stagers etc.  We spent close to $40,000.  It was worth every penny.  The house shone like a jewel. Our home was listed for $1,749,000.  At that price level, buyers expect a home to be a jewel.
 
Of course as a seller I thought my home should be listed higher.  The good news is I listened to my realtors. I took my own advice. Pricing is tricky in today’s market.  You need to be competitive.  You need to create excitement in the minds of buyers. They know the market and they know value. If they don’t see the value—they just move on.
 
This is only the beginning of the story.  Next is the offer and negotiation to open escrow.  Not necessarily an easy task.  In our case, like in most offers, buyers want to see how low you will go.  We were no exception. The offer was well under asking. From what I was told the buyer had consulted with a friend who said you should use this tactic. Well it almost lost them the home.  Fortunately, my realtor let more reasoned minds prevail.  She suggested I counter back a little (a very little) under full asking price. Let’s see if the buyer is truly serious about buying your home. We did as she asked. It worked the buyer accepted our counter. They were serious about buying. If I went with my initial response---why counter at all. We wouldn’t have known if they truly wanted to buy our home. The lesson---always counter---it never hurts you.
 
Of course, after we opened escrow another offer came in $70,000 over the first.  Where were they two days before?  It happened to us when we sold our home 20 years ago. My feeling is still a bird in the hand is worth two in the bush. Obviously they were trying to give us motivation to bump the first offer. After a few days, they weren’t willing to wait. So they weren’t as committed as our first buyer.
 
After numerous inspections---and I mean numerous----I was getting the feeling the buyer would be offering us a proposal.  Our home was built in 1926, with a 1926 foundation.  The buyer, and rightly so was concerned, as he was paying all cash. We were informed of all the expense it would be to bring up to current standards. Are you getting the story?  If he thinks I am going to replace the foundation----you know how this thought ends.
 
Twenty five days later and on the day the final contingency was to be removed the buyer comes back with an addendum and yes they are asking for a credit back.  To be honest it was in the ball park.  To counter or to accept that is the question.  If we accepted our home is sold.  If we counter who knows.  I wanted to counter---my wife didn’t. Have you heard this one? Now comes the real negotiations.  After a warm discussion with my wife, the decision was made.  Yes, you know who won. Our home was sold. After we let our realtors know what we decided. They told us with the extra few dollars we may have received we bought the buyers goodwill, particularly as they were reasonable in their request.
 
Our home is now closed.  The buyers are delighted and so are we. If it wasn’t for our realtors and my wife we may still have been on the market.  I am thankful for both of them. It is a different market than a year ago.  I feel we received a fair price for our home. What it showed me is the old expression if an attorney represents themselves they have a fool for a client.  In this market a seller more than ever needs an experienced knowledgeable realtor to insure they maximize their equity, but most importantly they close their escrow."
 
Avram Goldman
President and COO
Coldwell Banker SF/Bay Area
12657 Alcosta Blvd. #500
San Ramon, Calif. 94583
925.275.3008 (direct)
925.323.8881 (cell)
 
 
 
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• Aug. 11, 2006 - Selling Houses is a Numbers Game

 Well, the news is out! The market has started to slow down. We are blessed in this area that the impact has been minimal compared to other areas. Starter homes are still very much in demand, although even those are taking a bit longer, on average, to sell. Pricier homes are definitely sitting on the market longer (as much as 9-12 months in some peninsula areas) and price reductions are not uncommon.

So, what does it take to sell a house? Well, there is a long answer and a short answer. I will skip the long answer here, except to say that it almost always takes a lot of hard work. The short answer is summed up in two words, price and exposure. Price is obvious. An overpriced house may not sell, even in the most heated markets. But once the market softens and buyers begin to realize they might not have to compete for the house they want, they will look long and hard at the price. It has to be reasonable or they will pass. (Also, even if a high priced house sells, it may not appraise at the purchase price.)

Exposure is another story. The more buyers are exposed to your house, the more likely it is to sell. And there is so much to choose from in the way of advertising! There is the traditional ad in the newspaper, there are websites, too numerous to mention, and there is the Multiple Listing Service used by professional real estate agents. Historically the MLS was used so agents could advertise their listings specifically to other agents. This system was a “win-win” for everybody. There may be thousands of buyers out there, but many of them relied entirely on their agent to find homes for them to look at. Naturally, the more agents who knew about your own listing, the more likely it was to sell (… the numbers game.) Advertising in the newspaper might bring some other buyers who had not yet associated with an agent, but that was just the tip of the iceberg, and an agent who relied exclusively on newspaper advertising was probably missing the bulk of the buyers.
 
Then, along came the internet. With very few exceptions, all those MLS listings were now available online for everybody and anybody to see. Some sellers mistakenly draw the conclusion that they can bypass their agent and advertise as effectively on the internet by themselves. But that may be a false assumption. The reason is that many of the most popular internet sites are open only to real estate agents. Realtor.com, the #1 real estate website in the country, where over 70% of today's home buyers start their real estate searches, only shows homes that are listed on various MLS services around the country. Many search engine sites such as yahoo real estate and others download their listings from Realtor.com, so once again, the hose has to be listed on a MLS to be included. 
If you use almost any search engive to look for homes for sale in your local area, almost all of the hits will be large companies who have been able to buy top spots on that search engine. There are millions, maybe billions of dollars being spent by real estate companies on the internet for just this. It is BIG business!  If you want to be on page one, or even page two of a potential buyer’s search, you have the best chance by listing with an agent who knows how to advertise on the internet and who has access to MLS driven websites.
 
 

 

 

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Selling real estate in the mid San Francisco peninsula is unlike selling real estate in any other area. Just as the geographical area is famous for its microclimates, the real estate landscape has its own microclimates, each with its own idiosyncracies. An experienced agent will be in tune with the subtle variations from one subarea to another. But it is always changing. In this blog I will attempt to capture some items of interest to buyers and sellers alike, and to have some fun as well (see ""Fun Stuff"). If you have information you would like to have posted on this website, please email your suggestios to Lmercer@Lmercer.com.

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