Real Estate Insights

You may notice a dramatic increase in the number of open house signs propped up on street corners across your city this weekend…don’t panic, our housing supply didn’t double since last weekend…it’s time for the National Association of REALTOR’S (NAR) nationwide Open House weekend campaign.

June 4^th and June 5th

NAR’s intent is to motivate both Realtors and their clients into hosting an open house on this Saturday, Sunday or even both days, in an effort to “focus attention on the benefits of home ownership to families, communities and the economy.” It is estimated that over 250 local REALTOR associations across the country, with members representing tens of thousands of homes, will be participating in the event.

Participating Realtor members will be armed with recent housing news, statistics and market trends hoping to shed light on the incredible opportunity that today’s housing market provides…just last week the National Association of Home Builders reported that home affordability reached its highest level in 20 years, and mortgage surveyor Freddie Mac reported that for the sixth straight week fixed-rate mortgages inched down, reaching new lows for 2011.

What does this mean to homebuyers?

Grab your open house list, your property feature checklists, your neighborhood comparison checklists, and your Realtor interview questions…because if you’ve been considering whether or not to make a home purchase, this weekend will make for a great opportunity to see many different homes in all of your favorite neighborhoods…and if you’re not currently working with Realtor, you’ll also have a great opportunity to get to know a few.

Enjoy your weekend and happy house hunting!

Open House Lists

Click the links below to view all upcoming open houses in the following areas of Santa Clara County:

Located just 10 minutes to the southwest of downtown San Jose, tucked between Santa Teresa and Los Gatos, you’ll find the gorgeous bedroom community of Almaden Valley. Named after Almaden, Spain for its rich quicksilver mines, this community is now home to over 37,000 residents, mostly upper middle class with homes owned by local professionals, scientists, athletes and Silicon Valley executives.

The area is quickly becoming known for its academic excellent boasting top public schools such as Williams Elementary, Bret Harte Middle and Leland High to name a few. Additionally, residents are drawn to the many of the area’s beautiful county operated parks including the 4,100-acre Almaden Quicksilver County Park, Almaden Lake Park, Calero County Park, Santa Teresa County Park, and the Alamitos Creek Trail that runs down Almaden Valley to name a few.

A quick scenic drive down Almaden Expressway, south towards the historic mining town of New Almaden, reveals just how affluent this community has become. The hillsides of the valley are strewn with multi-million dollar homes, the older neighborhoods are littered with newly developed tracts and fully remodeled homes, and there’s even a private golf course atop the gentle rolling hills overlooking Almaden.

But with an average list price for a single family residence of $1.045Million (according to Trulia.com for the week ending May 11^th, 2011) it may seem difficult for many to take advantage of all that this beautiful community has to offer. Well here’s some great news…most buyers don’t realize that there are some fantastic properties available well under the million-dollar mean listing price…from single family homes that need a little TLC to fantastic townhomes with the appeal of a single family home.

Here are some tips to help with your search in Almaden Valley:

The Market is ripe with opportunity…

You’ve probably already heard that it’s not a good idea to buy the most expensive home on the block when considering future value. Well this area now has a small handful of single family homes available for even the most budget-minded buyers. These properties will most likely not be turn-key, and they probably won’t have all the fancy upgrades, but if you’re looking for value then you’ve come to the right neighborhood…and with top area schools there’s no question about where property values are headed!

> Search all Almaden Valley single family homes under $1.0 mil

Think townhome…

Like many young families today, if your budget doesn’t support a million dollar mortgage payment, or if you lack the large reserves necessary for rehabilitating a fixer-upper, then you may want to consider purchasing in one of the many townhome communities throughout the valley. Now you may have a negative connotation about townhomes…credited to high HOA dues, attached walls, and lack of parking…but once you learn about the unique properties available in Almaden, you may just change your mind. Here are a few of special character and beauty unlike any others you’ll find in San Jose:

• California Ridge - One such community is the California Ridge townhome development (100+ units) located in the southwest end of the valley in a tranquil hilltop setting. Here you can live among the majestic oak trees and choose a neighborhood next to a babbling brook, or one higher on the ridge with breathtaking views of Silicon Valley and the surrounding scenery. Built in 1986, this community is reasonably priced in the $500k to $700k range and has several different models available including single story and two story units ranging from 1,155 square feet of living space up to 1,600. HOA dues are reasonable ($300), units come with an attached 2-car garage, and there is plentiful guest parking throughout the neighborhoods. For further details visit their website: www.californiaridge.com

• Villas of Almaden - Another well known townhome community is located in the middle of the Valley across from Almaden Lake Park  This distinct community consisting of 180 townhomes nestled in both hilly and valley terrain all accessible by a gated entrance, offers models ranging from 1,750 square feet of living space to nearly 3,000. Prices range from $600k’s for the smaller units, up to $900k for the largest models. For further details visit their website: www.villasofalmaden.org

• Copperwood – located in the middle of Almaden Valley, next to the Safeway shopping center on Camden and Almaden, you’ll find the townhome community of Copperwood. Built back in 1976, this community, currently the most affordable in Almaden, consists of several different models ranging from single-story with 1,124 square feet of living area, to the largest 2-story models with over 1,700 square feet of living area. Most units have been extensively updated, the HOA due are reasonable ($330), and complex amenities include pool, spa and tennis courts.

No matter how tight your home buying budget may be, due to the current economic climate, it has never been a more opportune time for buyers to consider this truly awesome community. And if you’re not familiar with Almaden, I implore you to drive out and discover just how beautiful this area really is!

Home sellers who used a real estate agent are 50% more successful at getting their homes sold than unrepresented sellers, according to researchers at HomeGain.com.

But did you know that buyers who use a real estate agent are also more likely to have a successful transaction?

Here are the top reasons that homebuyers should choose to work with a qualified real estate professional, preferably a REALTOR®.

Getting a purchase closed in today’s market is complex and filled with buyer traps.

Buyers face many more hurdles including stricter financing and a confusing marketplace of listed homes, fore-sale-by-owner homes, foreclosures and short sales. Your area may be in a buyer’s market with lots of inventory available and falling prices, but the home you want may be in a price range or neighborhood that’s in a seller’s market.

A professional is more likely to help you close on the home of your dreams.

To take advantage of today’s near-record low interest rates, attractive inventory levels, and prices rolled back more than a decade, you need a sales professional to help you close the deal. A good real estate professional understands the current market. He or she has house-by-house neighborhood experience and help you obtain the right house at the best price and terms.

Real Estate Agents will navigate you through the home buying process.

Once you find the house you want, the work really begins. You’ll need help navigating negotiations, loan approval, seller’s disclosures, inspections, repairs, and much more. Your agent will share your risk, and will make sure you go into any home purchase with your eyes wide open.

Best of all, real estate professionals work primarily on commission.

In most instances it won’t cost you anything to hire a professional to assist you with your real estate purchase. In fact, your real estate agent is paid a commission from the sales proceeds of the home, which comes from the seller’s pocket. And since your agent won’t be earning any income until they have found your dream home, they will be motivated to assist you with all aspects of your purchase transaction.

But, it also means that if the deal of the century is about to come on the market, who do you think your agent will tell? The buyer who thinks he’ll get a better deal by working every agent, or the buyer who is loyal?

It’s common courtesy to work with only one agent per area that you are looking; and if it’s customary in that area, don’t be reluctant to sign a buyer’s representation agreement with your agent once you have chosen the right agent to represent you in your transaction.

A buyer representation agreement (which is always an option) will help spell out the specific duties that your buyer’s agent will perform, meaning you will receive a higher level of service since the buyer’s agent has a formal commitment that you will utilize their services should you purchase a home in their market area. Just be sure to discuss the agreement at length so you and your agent have a clear understanding on expectations…and most agreements allow for the termination of the contract should you become unsatisfied with your chosen agent’s performance.

And lastly, be sure to stay in contact with your agent. If you want to look at open houses or builder homes, invite your agent to come along. If they happen to not be available, show your loyalty by telling the salespeople you meet that you are already represented.

Take advantage of the greatest home-buying resource available – your neighborhood Realtor®.

Home sales have generally stabilized since the crash in 2008, but home prices are still “up in the air” in many neighborhoods across Santa Clara County. Although foreclosures have diminished, short sales continue to make up a large portion of just about every community’s housing market. So with all the uncertainty, how can today’s sellers who are not facing a distressed sale stand out in their local real estate marketplace?

Here are some realities that any traditional seller who is thinking about putting their home on the market should consider before listing their homes in our current market:

Reality – It will cost you dearly to “chase the market”

Unfortunately, unless you live in the best school districts within Cupertino, buyers are still in control of most markets in Santa Clara County. Added all the national media doom and gloom (talks of “double dip” recession) makes most buyers feel that they are entitled to get a “steal” if the buy right now.

Food for thought - In the past year, about 25 percent of sellers (up from 22% the year before) who initially listed their homes too high ended up having to reduce the price, according to Trulia.com.

So when you’re preparing to list your home, price your home competitively out of the gate. Be sure to discus the market activity in your neighborhood carefully with your Realtor and avoid being tempted to list above fair market value, even if you’re just “testing the water,” as it will surely cost you more over the long-run.

Reality – Buyers won’t pay more for Your house because it has retro-tiled bathrooms

Since home price appreciation is certainly under popular speculation, unless your home has some serious upgrades and advantages over recent sales, be prepared to list at or below your best comparable properties. And with news coming from the National Association of Realtors® (NAR) that the median home price (nationally) fell 5% between February 2010 and February 2011, most buyers will be expecting a discount over previous recent sales unless you can prove why they should pay more.

So, before you rush your home to market, be sure to carefully examine the recent sales activity ion your neighborhood as well as the competition you will be selling against. When it comes down to it, a buyer will choose the best home offered at the best price, so be sure your Realtor walks you through your competition.

Reality - Consider frequent price reductions

During the first 30 days your home is listed on the market it will get the most attention and showings (new listings generate the most buyer traffic), so if you haven’t received any offers during this time then you may want to consider a price reduction. Try putting yourself in the buyer’s shoes for a moment…if a property has been sitting on the market for an extended period of time, wouldn’t you start thinking it must be listed too high, or have some defects?

In order to avoid creating any negative stigmas about your property you should consider making a price reduction plan upfront with your listing agent. Sometimes making a price cut can be extra motivation for buyers to take a second look or attract a new pool of potential buyers seeking a lower price range.

Reality – When you’re selling your home, it’s no longer “your home”

According to a recent NAR article, with the increased level of housing inventory available, more buyers prefer homes that are in move-in ready condition. So if a buyer can’t imagine himself moving into your home the next day, chances are you won’t get top dollar.

So how do you prepare properly? Think “curb appeal, cleanliness and staging…” as these are all key areas that buyers tune into immediately, and considering how first impressions last, if your home is not top shape some buyers may be more likely to turn up their noses. Take extra effort to keep the house in its best shape and be sure to remove clutter and personal accents (like your grandmothers spoon collection hanging in the kitchen, or the life-sized family portrait above the fireplace)…every buyer who walks through the front door needs to be able to imagine that your home is their “new home.”

Work with your listing agent on a plan to prepare your home for sale and discuss the costs and expenses of staging your home. More real estate brokers agree these days that proper staging can actually speed up a sale and increase the final sales price, so be sure to discuss the costs and benefits of hiring a staging professional who can make your home look like it’s ripped from a catalog.

Reality – If buyers can’t see your home they won’t buy it!

You need signs, flyers, open houses, internet presence, and if you’re still occupying the home, you need to be flexible. Think traffic…the more the better!

Your goal, along with the goal of your agent, is to get the home in front of as many possible buyers as possible. Considering that 87% of buyers (and rising) start their home search on the internet, you should ensure that your Realtor can help you come up with a solid marketing plan (including maximizing internet exposure) that will bring the most traffic to your home.

Just make sure that when buyers show up to see the home, they are able to see it! One of the most frustrating aspects that buyers face when conducting their property searches is trying to schedule showing appointments…the more flexible you can be the better chances the right buyer will come through your home soon after it is listed.

Also, think mobile technology – we’re living in an age of instant gratification…if a buyer wants information on your home, they need to receive it quickly or they may lose interest, meaning you lost a potential buyer.

Reality – Buyers will try to purchase your home for the least amount possible

Once your home has been listed for sale your top goal, along with your Realtor, is to generate offers...the more the better! This may mean that an interested buyer may try to make a low-ball offer if they know there haven’t been any previous offers, just keep in mind that you don’t have to accept their offer and you always have the ability to negotiate terms.

However, if a buyer is willing to write an offer then they’re also willing to negotiate… that’s when sellers need to try to set aside feelings of anger or insult and concentrate on the negotiation of terms. And, using incentives, such as agreeing to leave certain appliances or pay for repair work, may get buyers to budge in agreeing to a higher price.

Reality – Buyers today are not in a hurry to buy!

Given today’s low mortgage rates combined with low home prices and high inventory levels, buyers today are surely not in a rush unless they have some personal reasons for purchasing. But, as more realities of the current housing market are relayed to potential buyers, the more likely they will get “off the fence” and purchase, especially since the cost of home ownership increases as interest rates rise, even with falling home prices!

(March 30, 2011) It seems that Santa Clara County residents have something new to boast about…our health. I guess all the sunshine and beautiful scenery has helped our residents stay healthy, and the health care options available to our residents aren’t bad either.

According to the 2011 County Health Rankings, the most comprehensive report of its kind to rank the overall health of nearly every county in all 50 states, Santa Clara County ranked high on overall health— 4 out of 56 —compared to all counties that were ranked in the state.

This is the second year of the County Health Rankings, a study performed by the University of Wisconsin Population Health Institute and the Robert Wood Johnson Foundation. The Rankings, in which a standard measure is used to determine how healthy people are and how long they live, helps counties see where they are doing well and where they are not so they can make changes to improve the overall health of their residents.

According to the report, a number of factors were used in determining the differences in overall health of a community. These factors ranged from individual behavior to access to health care to education and jobs to food access to air quality. Since these factors can be influenced by public policy and community-based programs, the report provides community leaders with valuable information to assist them in making decisions and changes that will improve the community’s health.

In short, the results of the survey help local government understand what they are doing well and where they can improve in order to help residents lead healthier lives. And looking at the results from the latest survey, the high rankings received by Santa Clara County, further affirms that the public policies offered through our county are working…such policies as reducing exposure to second-hand smoke, supporting public transportation, and providing the renowned Valley Medical Center and Valley Health Clinics.

So spread the news and let everyone know how lucky they are to live in not only one of the most beautiful places in CA, but also one of the healthiest. For more information about this report visit their website - www.countyhealthrankings.org

There are many new laws recently passed that have gone or will be going into effect this year. These laws vary as to their impact on the real estate industry, from stopping lenders from seeking deficiency judgments after short sales to requiring an operational carbon monoxide detector in each home at time of sale, so to help you get a quick feel for these important new laws here is a quick summary:

No Short Sale Deficiencies Allowed for 1st Trust Deed Holders

Starting January 1, 2011, providing written consent to a short sale shall obligate the first trust deed lender to accept the sales proceeds as full payment and discharge of the remaining amount owed on the loan. This law applies to first trust deeds secured by one-to-four residential units, but if the owner commits either fraud with respect to the short sale, or waste with respect to the secured real property, then the lender may seek damages and use existing rights and remedies against the owner or any third party for fraud or waste.

Note that this law doesn't apply if the trustor or mortgagor is a corporation or political sudivision of the state, and junior lien holders are not subject to this law.

New tax filing requirements for property managers and landlords

Basically, ANY person who receives rental income (no longer limited to property managers) will be required to report all expenditures of more than $600 to anyone (or to any business) from whom they purchased services. Thus, “mom and pop” investors and those who invest in real estate for their personal portfolios are now subject to the new reporting requirement. But, only aggregate annual payments of $600 or more for services (but not goods) will be required to be reported.

This means that if you own investment property and are renting it out without the help of a licensed property manager, then for any services purchased for the maintenance of the property (such as services provided by plumbers, carpenters, yard or garden workers, electricians or any other service providers), you will be required to file an IRS Form 1099 any time the total expenditures/payments to a particular vendor in one year exceed $600.

For more information please see the IRS website: http://www.irs.gov/

The Carbon Monoxide Poisoning Prevention Act of 2010

By July 1, 2011 every owner of a “dwelling unit intended for human occupancy” must install an approved carbon monoxide device in each existing dwelling unit having a fossil fuel burning heater or appliance, fireplace, or an attached garage. Regarding rental properties, the law gives a landlord authority to enter the dwelling unit for the purpose of installing, repairing, testing, and maintaining carbon monoxide devices “pursuant to the authority and requirements of Section 1954 of the Civil Code [entry by landlord].” And a carbon monoxide device must be operable at the time that a tenant or buyer takes possession of the property.

Under the law, a carbon monoxide device is “designed to detect carbon monoxide and produce a distinct audible alarm.” It can be battery powered, a plug-in device with battery backup, or a device installed as recommended by Standard 720 of the National Fire Protection Association that is either wired into the alternating current power line of the dwelling unit with a secondary battery backup or connected to a system via a panel.

This new law requires the owner to install the devices in a manner consistent with building standards applicable to new construction for the relevant type of occupancy or with the manufacturer’s instructions, if it is technically feasible to do so. CA State specific building code states that a device shall be “installed outside of each separate sleeping area in the immediate vicinity of the bedroom(s) in dwelling units and on every level including basements within which fuel-fired appliances are installed and in dwelling units that have attached garages.”

Energy Audit in Home Inspection Report

In California, new homes must be built to comply with the latest Building Energy Efficiency Standards (Standards) and since a majority of our existing homes were built before the first Standards were established in 1978 with limited energy efficiency measures, beginning January 1, 2011, a new state law requires the home seller or broker to inform the buyer about the existence of California Home Energy Rating Program by delivering a Home Energy Rating System (HERS) booklet.

Recently released by the California Energy Commission, the booklet is designed to educate homeowners, home buyers, and home sellers about Whole-House Home Energy Rating services and their benefits, opportunity to invest in energy efficiency improvements at the time-of-sale, and available financing options. Additionally, a home inspection and inspection report may, upon a client's request, include an audit of the energy efficiency of a home, according to the standards of the Home Energy Rating Systems (HERS).

More can be found at http://www.energy.ca.gov/HERS/index.html

Lead-Based Paint Renovation Rule

The rule also establishes requirements for training renovators, other renovation workers, and dust sampling technicians; for certifying renovators (and others); for accrediting providers of renovation training; for renovation work practices; and for recordkeeping.

The term renovation includes (but is not limited to): the removal, modification or repair of painted surfaces or painted components--such as sanding or scraping doors, window frames, walls, ceilings, etc.

The term "renovation: does not include minor repair and maintenance activities. Minor repair and maintenance activities include minor heating, ventilation or air conditioning work, electrical work, and plumbing, that disrupt 6 square feet or less of painted surface per room for interior activities or 20 square feet or less of painted surface for exterior activities where none of the work practices prohibited or restricted by Section 745.85(a)(3) are used and where the work does not involve window replacement or demolition of painted surface areas.

For additional information, go to EPA Web page on Renovation, Repair and Painting (RRP) at http://www.epa.gov/lead/pubs/renovation.htm.

Last week, on January 10, 2011, the State of California launched the “Keep Your Home California” campaign with the rollout of the Unemployment Mortgage Assistance Program (UMA). The UMA program is expected to assist as many as 60,000 eligible homeowners by providing a mortgage payment subsidy of up to $3,000 for a maximum of six months.

Eligible unemployed homeowners facing imminent foreclosure should call for the chance to apply for the state funded mortgage assistance program. Phone lines are now open 888-954-KEEP (5337) and the agency has already received over 1200 calls over the first two days.

Supported by $2 billion in recent federal funding by the US Treasury, Keep Your Home California is a compilation of four unique programs that will become available over the next few months to eligible California families who are struggling to pay their mortgages.

The campaign is designed to address different aspects of the current housing crisis by offering the following programs:

1. Unemployment Mortgage Assistance Program (UMA) – up to $3,000 a month in mortgage payments for up to six months for mortgagors actively collecting unemployment benefits.
2. Mortgage Reinstatement Assistance Program (MRAP) – up to $15,000 for reinstatement of arrearages.
3. Principal Reduction Program (PRP) – up to $50,000 contribution toward principal balance reduction.
4. Transition Assistance Program (TAP) – up to $5,000 in transition assistance for short sales and deeds-in-lieu of foreclosure.

The programs are designed to assist those homeowners who have experienced a change in household circumstance such as death, illness or disability, or are subject to a recent or upcoming increase in their monthly mortgage payment and are at risk of default because of this economic hardship when coupled with a severe decline in their home's value.

But these programs are only available to homeowners whose mortgage servicing company agrees to the terms and conditions governing the use of these funds. So far participating lenders, loan servicers and agencies include Wells Fargo, Chase, Bank of America, GMAC, CalHFA, and the Department of Veterans Affairs, as well as the government-sponsored Fannie Mae and Freddie Mac.

If your servicer is not currently participating in Keep Your Home California, you may want to call them and encourage them to do so. For more information and the most recent list of services participating please visit: http://www.keepyourhomecalifornia.org/

As California strives to improve energy efficiency across the state, REALTOR®’s can now offer their clients a rebate towards a home energy audit through the California REALTOR®’s Energy Audit Program (R.E.A.P.), a new program that provides rebates of up to $250 on Home Energy Rating System (HERS) home energy audits conducted by certified HERS raters.

Home energy audits help homeowners identify improvements they can make to their home to reduce their monthly utility bills. Improving the energy efficiency of your new home is a great way to counter rising energy costs and make your home more affordable.

To qualify for the program, homeowners must:

• Use the home as a primary residence
• Conduct a HERS home energy audit of the home prior to close of escrow (as part of the Energy Efficient Mortgage*) or no later than 60 days after escrow
• Use a California REALTOR® in the transaction (referrals do not qualify)

The REALTOR®’s Association hopes that this new program will help California homebuyers realize that an energy efficient home saves money. Additionally, home energy efficiency upgrades can now be financed into new purchase mortgages, or even new refinance mortgages (under certain circumstances).

The program is sponsored by the REALTOR® Housing Affordability Fund which is dedicating $250,000 towards this effort. If you are planning on purchasing a home in the coming months and are interested in applying for the REAP rebate just request an application from your California REALTOR®. For more information, including eligibility and application requirements, please visit www.carhaf.org

In an effort to support energy efficiency in residential housing, Fannie Mae recently announced that they are now offering borrowers the ability to finance the cost of adding energy improvements to their homes limited to 10% of the “as completed” appraised value of the subject property.

This new energy improvement feature will be available to borrowers through all lenders selling mortgages to Fannie Mae. Eligible transactions include purchases and refinances (where the borrower receives limit proceeds) on residential 1-4 unit properties of all occupancy.

In order to take advantage of this feature, borrowers must obtain an energy report prepared by a Home Energy Rating Systems (HERS) energy rater which identifies the recommended energy improvements and their potential costs. At the closing of the new loan, the borrower will receive a credit by their lender (passed down by Fannie Mae) towards the cost of the report.

Although the ability to finance home energy improvements is not new, by combining this feature with traditional purchase and refinance mortgages Fannie Mae hopes to encourage more borrowers to increase the energy efficiencies of their homes.