Los Altos Real Estate Blog

In many competitive real estate markets, home buyers are coached by their agents to write their "highest and best" offer to get the home.  In a multiple offer situation (which is becoming more common again), a buyer has ONE SHOT to win.  As a home buyer, you write your "best" offer but...not really.  You probably held back a little, right?

Real Estate Is Like Poker

When it's the final table, last two players...you and the seller...you have to go "all in" to win.  Take the Palo Alto market for example.  You write a full price offer on a house listed at $1.1M knowing you could write at $1.2M - that isn't your best offer.  The house sells at $1.2 leaving you wondering what happened.  A hot market like Palo Alto requires going "all in" to win.  The same applies to Cupertino and Los Altos in many cases.  Don't hold back!

The Need To Save

As with anything else, you want to get the best deal possible.  I get that.  My job as your agent is to get you the best deal possible.  But, you have to actually get the deal.  Making offers that don't get accepted is just a waste of time.  So, you'll get guidance from me telling you what your highest and best offer need to be.  That guidance is based on what is happening right now.  I beat out 34 offers on a house in Cupertino, trust me, I know what you need to do to win.

What's Your Best Offer?

The offer I tell you to write will be your best offer.  That's my job and what you pay me for - guidance on what the best offer is.  I'll tell you the price and terms.  We can certainly talk through all the points but just remember - this is what I do every day.  You'll want to hold back.  Don't.  Let me guide you and you'll walk away with a good deal but a winning deal.

With smart phones and digital cameras, home buyers are often seen taking pictures of the houses they tour.  This is especially true of homes they really like because they want pictures of rooms to recall specific colors, layouts, etc.  Buyers may also want more photos than the listing agent took.  Regardless, home buyers will frequently bring their cameras to open houses and private showings.

Is it legal? - It is in California but that may change.  The topic has been discussed by the California Association of REALTORS.  There are listing agents and homeowners who think the practice poses a security risk.  Others think it just invades the privacy of the homeowner.  As long as the homeowner doesn't object, I permit pictures to be taken.

Here's what I do:

• You're welcome to take pictures at an open house, especially if it's vacant
• I'd like to know why you're taking pictures
• If you're a neighbor looking for decorating ideas - fine
• I'd like to know what you're taking pictures of

Should buyers be allowed to take pictures?  Yes, in my opinion.  As a buyer, I'd like to think that the pictures you take will put my listing at the top of your mind when you look later.  It means you're thinking about the home in more detail than the limited number of pictures a virtual tour or photo collage gives.

What pictures should a buyer be taking? 

• Room angles not in the tour or photo collage
• Any exterior shots
• Details of decorating elements of the home
• Any fixtures that stand out as interesting

What pictures should a buyer NOT be taking? 

• Personal items of the homeowner
• Close up shots of any personal items
• Anything that might be used to test security

Policies vary from agent to agent and you should ask the agent at the open house for permission before taking any pictures.  Agents should have the OK from homeowners before allowing anyone to take pictures at an open house.

This is directed at the consumer, the home buyer.  Yes, that's right, you...the person sitting there reading this because you want to buy a home.  You've been searching on the Internet looking for tips so I've got a few good ones for you.  A a prospective home buyer, what should you do when you go to an open house?

Be Honest

• Walk in, be polite, and shake hands with the agent
• If you have an agent, let the open house agent know right away
• If you don't want to work with an agent, just tell the open house agent that
• Let them know if you're new, been looking for a while, serious or not

There's nothing worse for the agent at an open house than having someone come in and say things just to get a little information.  It's deceptive.  I'm always happy to share what I know but I, as with my many colleagues, would prefer you be honest about your intentions.  In particular, tell me if you have an agent.  Being honest will actually get you further than not.

Ask The Right Questions

• What can you tell me about this house?
• What inventory is coming soon?
• Are there homes "off market" or "off MLS" that the public doesn't know about?
• Are there market trends I can't find online?
• What should I know that I won't find in the reports?
• What are the pros and cons of this house?

The agent at an open house may be able to give you insights you can't find online, in the brochure, or in reports. They should know details of the home and neighborhood not included elsewhere. The agent who really knows the market you're shopping in will (or should) know about inventory coming soon or available off market.  They should also be able to tell you the trends so you'll know if now is a good time to buy or you should wait.  The open house agent should also be able to give an opinion on what's good and bad about the house they're hosting.  You'll want an agent with perspective and an opinion, not just a cheerleader trying to sell the house.

Get To Know The Agent

You may be new to the market or just not tied to an agent yet. If you haven't interviewed any of them or very few, take the time to get to know the one at the open house.  The more agents you talk to, the better an idea of the style and knowledge you need and want.  If you like the agent at the open house and can talk with them easily and learn something you didn't know, they're a good candidate to help you in your search.

Read The Disclosure Reports

Take the time to read disclosures and educate yourself about what to look for.  After a while, you'll learn what matters and what doesn't.  If you have questions, ask the agent.  If the agent is particularly helpful, then perhaps that's the agent you should be working with.

Leave On Time

If you arrive at 4:25 and the open house is only supposed to go to 4:30, don't linger for 30 minutes.  It's just plain rude.  Believe it or not, the open house agent might actually have plans afterward.  If you want to see the house for a longer period of time, no problem, ask for an appointment.

Leave Your Contact Information

...only if you plan to actually work with the agent you've met.  Don't give out a name, number, and email address setting the expectation of doing business unless you actually plan to follow through with it.  Agents are at open houses to get new buyers.  If you're willing to be a buyer, leave your information.  If not, don't.

What's the point of going to an open house?  It's to learn about the property and the market.  To educate yourself as a home buyer, you want to see several homes and meet a few agents before jumping into buying.  Follow these suggestions and you'll learn the market in a short time.

How many times have you driven up to a house that looked great in the MLS, only to find that it's in a less than ideal neighborhood or immediately next to a really messy neighbor?  I'll bet it's quite a bit.  No matter where you look, the neighborhood has an impact on how desirable a home is to a buyer.  In Silicon Valley, it's very easy to go to a neighborhood where a new home is sitting next to a house with dead grass, peeling paint, and worse.  So, how do I save myself the time and trouble of driving all over the place?

Google is probably one of the best tools a REALTOR can have.  One of their best features is StreetView.  While it doesn't work everywhere, it offers the chance to preview a neighborhood in seconds.  Here's what I do to save time:

1. Look at the overhead satellite view first.  This shows me what's in the back yards of all the neighbors.  I can see who keeps their property clean and who doesn't.  Neighbors with nice front yards but unkept backyards may be on the way to selling.  Or their messes could have an impact of the value of the home you're previewing.
2. Look at StreetView second.  This shows me who has junk, old cars, RVs, weeds, and overgrown landscaping.  Most clients will shy away from neighborhoods with too many poorly maintained neighboring homes.  If you see a nasty looking neighborhood, you just saved time showing that home to your clients.

What are the benefits of StreetView?

• Saves time!  Why drive to 6 properties in 1 hour when I can see them all in 5 minutes on StreetView.
• Saves money!  Driving around costs gas and the value of my time.
• Faster response to clients!  Previewing via StreetView let's me get perspective back to my clients faster than driving around.  This is especially important when working with multiple buyers.

If you're a consumer reading this article, guess what, you can do this too!  As a home buyer, your time is valuable and being able to preview a neighborhood saves you valuable time too.  When you see a home that you like and the neighborhood looks nice as well, then it's time to make the pesonal trip to see it.

A home buyer walks into a house, spends an hour wandering around fawning over how nice it is and how it's absolutely perfect.  They've been looking for a while and decide, we'd like to make an offer!  Good news!  But, before they write the offer they'd like to have a couple of friends and family show up to get their opinion.  You come back to the house and meet your clients, along with 15 friends and family who, the helpful sort they are, point out all the things THEY DON'T LIKE.  When they're done, the buyers decide not to buy.

WHY?!?!

I work in a market where some buyers absolutely WILL NOT make a final home buying decision without bringing along their Entourage of Deal Killers.  I refer to them as that because, ultimately, they'll actually do more harm than good.  Here are some reasons for why the Entourage of Deal Killers (aka friends and family) should NEVER be allowed to help you make a buying decision:

• They'll never live there
• They aren't paying the mortgage
• They don't reflect the buyers taste, just theirs
• They'll never live there

I repeated that last point because unless they're living in the house and paying the mortage, their opinions are based on subjective criteria.  Unless they are qualified to certify construction quality or some other aspect, their opinions about floor plans, layout, colors, and other details are not important.  What is important is WHAT THE BUYER THINKS!

For agents, there is little we can do to dissuade using the committee.  If our clients want to get other opinions, they're welcome to do so.  What we can do is try to explain that any objection offered by friends and family is just their opinion.  Ultimately it's the buyer who has to like the home and be willing to buy it.  Some things I tell my clients who bring their Entourage of Deal Killers include:

• Get a home inspection so you have an objective opinion
• Have an interior designer or architect look at any shortcomings
• Review the top 3-4 things they really liked about the house when they first saw it

Going back to the things they like and weighing them against the issues brought up by the Entourage of Deal Killers can help buyers think logically rather than on the emotions of others.  I recommend taking this approach with my clients so they can make the best possible decision without being swayed by the subjective opinions of their friends and family.  Good homes in good areas of Silicon Valley and Los Altos in particular are rare.  Let me help you make the best home buying decision you can.

In Silicon Valley, multiple offers have become the rule and not the exception in many areas.  One property taking offers tomorrow has 13 disclosure packages out and it's in a price range where the ratio of offers to packages is about 60%.  If a home gets multiple offers, does it really matter how many there are?  In short, yes.  I'll tell you why.

Around here, the typical ratio of disclosure packages to offers if 3:1.  Meaning that if three packages go out, there will be one offer.  Before writing an offer I'll call the listing agent to find out how many offers are confirmed and how many packages have gone out.  If the agent sent out three packages, there's a good chance my clients may be the only offer.  Depending on the property, there might be another offer.  Either way, it means that my clients are unlikely to have to overbid the property at all and if so, only a little.

Things get more complicated as the offer count goes up.  If there are four offers, odds are that at least one will be full price and depending on the price of the home, they may all be at or over the asking price.  This changes the pricing and terms strategy for my clients.  If they're coming in with all-cash, then a decent price and quick close could get it.  If they have financing, they may have to bump up the price to overtake any cash buyers.  Either way, the strategy changes.  Competing against multiple offers requires a careful mix of price and terms.

So, yes, knowing the number of offers makes a huge difference in the price and terms of whatever offer my clients make.  With many Silicon Valley homes selling over their asking prices, coming up with the best combination of price and terms is important in multiple offer situations.

As most real estate agents know, home buyers and sellers frequently chose their agent based on a number of variables outside our control.  They may meet an agent at an open house, be referred by a friend, or do their own research to find who they think it "best" in their book.  Regardless of the method, these people will select an agent who is brand new almost as readily as they'll chose someone who has been in the business 20 years.  The reasons for their choice can vary just as widely.  As a consumer, how do you chose a real estate agent?

There are several possible ways to find an agent but once you do, you have the task of determining which one to work with.  If you're a typical consumer, you've probably had at least one friend refer an agent to you.  You've probably also worked with an agent in the past that you might reconsider and, if you've been out house hunting or looking at the local papers, you have met or called other agents.  From those, who do you select?  Rather than focus on their statistics or reputation, here are some factors you should consider:

Personality - This is the biggest aspect of choosing an agent.  You need to find someone who is like-minded and who you can work with.  The process of buying or selling a home requires a strong working relationship.  You need to find an agent you like, enjoy being with, respect, and trust.  If you choose a top producer you don't like but respect, it may be hard to listen to them when it comes time to make difficult decisions.  Choose the personality that works best for you.

Professionalism - Personal taste aside, professionalism is a combination of how an agent looks, dresses, talks, and carries themselves when interacting with other agents, buyers, sellers, and you.  There are flamboyant agents who are very professional but dress funny.  There are agents who look disheveled but converse like a lawyer.  You have to select the agent who demonstrates the right mix of qualities to represent you.  They are your gateway to the world of real estate so choose wisely.

Experience - A lot of agents will tell you that because they've been in "the business" 20 years, they're the best person for the job.  Not necessarily.  A pure sales background may not be in your best interest.  Choosing an agent who has a solid business background, has done a lot of negotiating (in any industry), understands finance, and other factors could be just as good or better.  You have to pick the agent who has the kind of experience you need. 

Sales Statistics - Don't waste your time considering this as a factor.  Here's why: volume or price aren't always the measure of what will work for you.  A new agent who sold 4 homes could do a better job for you than a top producer with a team.  Why?  Because a lot of high volume agents are also very hands off - they don't spend much time with you and you'll spend more time talking to their assistant or staff than to them.  That isn't always the case, but keep the relationship in mind when considering using stats as a variable. 

If you're looking to buy or sell a home in Silicon Valley, give me a call.  I specialize in off-market, hard-to-find, properties in Los Altos and Los Altos Hills, but am happy to help anyone.

The San Jose Mercury News published an interesting article about what you could buy in the Bay Area for $157,000.  That amount is significant because it's the median home price overall in the United States.  Sadly, the homes in the article are one train wreck after another with some described as "dangerous" by the listing agents.  One home was half burned down and another was so small it's hard to imaging anyone living in it.  Why bother buying any of these deals?

In a word, cashflow.  Investors can buy these homes and get a great return by renting them out.  This is what investors have been doing all around the area for the last 3 years.  In some areas, you can even potentially flip the house, if you put enough work into it.  It all comes down to how much effort you can put in and how fast.  The key to remodeling or rebuilding a home is time.  Professional investors and developers can flip the work done on a home in 30 days, perhaps a little more.  Here are some tips to flipping anything:

• Find homes that only need cosmetic repairs (landscaping, paint, light fixtures, appliances).  Those are the easiest to spruce up but also the target of many investors so be quick when making a purchase decision.
• find homes that don't need expansion.  A good floor plan as is will be easier to improve without the costly process of expansion which includes architect fees and planning fees not associated with other lesser remodels.
  
• Find homes that only need "over the counter" permits.  This includes landscaping, new windows, and other upgrades that don't review plans to go to the city Planning Department.  If the home is a truly exceptional opportunity and needs expansion, make sure you can expand getting one of these permits.  In cities like Los Altos and Mountain View you can get "over the counter" permits for expansions under 500 s.f. or that are at the ground level.

For those who are looking for similar deals in Los Altos, Mountain View or other nearby communities, don't expect to find anything priced this low unless it's low cost housing that has income restrictions. 

Here's the original article on the Mercury News website:

http://www.mercurynews.com/business/ci_17795863?nclick_check=1

Many people trying to get into Los Altos will look at homes that need some work.  A fixer-upper in Los Altos is a good investment and can be an inexpensive way to get into either the Los Altos school district or the Cupertino school district.  This article will talk about how to decide what to offer on a Los Altos fixer-upper so you don't overpay.

For this article, I'm going to use the listing at 1115 Saint Joseph Avenue in South Los Altos.  This is in the Highlands neighborhood of South Los Altos and has been a very active area in recent months.  This is a nice home in original condition (per the MLS) located on a well-traveled street.  It's a 3 bedroom, 2 bathroom home with a bit over 1300 sq.ft. on a nearly 11,000 sq.ft. lot.  It's currently priced at $1,125,000. The nearest, recent comparable home was on Stonehaven which sold for $1,625,000.  That home was similar in all respects except that is was a bit over 2300 sq.ft.  There is also a $500,000 price difference which is important for this discussion.

The most important adjustment is for quality.  The home on Stonehaven was not only larger but had an updated kitchen and bathrooms.  Major improvements needed include a new kitchen, new bathrooms, new walls (remove wood paneling), new floors (need hardwood), and paint.  Other lesser improvements include lighting, plumbing, doors, molding, and other features.  The total cost to make all these improvements should run about $100,000-$125,000.  Now, adding up the current asking price and the price of the improvements the total is $1,250,000 - a real bargain for any nice home in South Los Altos.

The next adjustment is for size.  To get the home on Saint Joseph up to the same size as the one on Stonebrook will require adding 1000 square feet.  The cost to build an addition, depending on whether or not is includes substantial plumbing or electrical work, should run about $250 per square foot.  Adding in the cost of architects fees, permits, and construction financing costs will run another $15,000-$25,000.  The cost of the addition is the $250,000-275,000.  Add that onto the adjusted cost of the improved home and the total comes to $1,500,000 and change.  Based on that, the home at 1115 Saint Joseph appears to be an excellent deal compared to other recent sales in South Los Altos.

The improvements don't have to be made unless the buyer wants to but the idea is to work out the costs to adjust one home for another.  With a little analysis, you can quickly determine if a fixer-upper home anywhere in Los Altos is a good deal.  Keep in mind that construction costs can vary from hilly areas in South Los Altos to flat areas in Central Los Altos due to increased foundation work and grading of the land.  A general contractor can give you a more accurate estimate to help make your decision.

I love working in Los Altos Hills because there are so many fine homes that help make the town one of the premiere locations in the country.  While it's relatively easy to figure out the quality level in the typical home priced near the median price of $2.2 million, it becomes much harder as the home price reaches the $6 million range and higher.  As homes increase in price, they typically have exceptional features that increase both quality and cost.  This begs the question of how to determine quality in a luxury home in Los Altos Hills.

First of all, price is not necessarily an indication of quality.  Quality is something that can be seen and felt.  It's a reflection of two factors, materials and workmanship.  This article will talk about a few of the critical signs used to determine quality in a luxury home in Los Altos Hills.  A true luxury home in Los Altos Hills uses premium materials but is also built to last.  The craftsmanship must be first-class with few, if any, flaws.

Stonework - This is present in both the exterior and interior.  The first factor in stonework is the workmanship.  While a concrete paver driveway isn't cheap, a cobblestone or similar natural stone driveway requires more workmanship to install and it feels more luxurious.  Such stonework also carries a better feel for the exterior walls and interior surfaces and rquires a lot of skill to install properly.  The second factor is the quality of the material.  A marble floor made with Pietra di Vicenza or Bianco Carrara is far more valuable than one made with Crema Marfil.  One common option that significantly increases cost is the use of antique materials including fireplaces, marble columns, and carvings.  All require costly master craftsman many hours to properly install.

Woodwork - Most Los Altos Hills luxury homes have hardwood in two primary areas, floors and cabinets.  In some cases there may be decorative beam ceilings, carved railings, and other treatments as well.  As with stonework, the material used can impact cost but craftsmanship is especially important.  A high-quality installation should have no gaps between planks and no variation in level (warping). Most hardwood floors can be installed by a good craftsman and they'll look great.  However, a more complex installation may have inlays or variable plank width that requires a combination of careful planning and skillful installation.  Many luxury homes in Los Altos Hills have variable width floors because they add texture to the sight line in the room.  Common types of hardwood used include Brazilian cherry and redwood (Massaranduba) which are both extremely hard and durable.  While many hardwoods cost $8-10 per square foot, some exotic types can run over $100 per square foot.

Crown Molding - Many Los Altos Hills luxury homes have some amount of crown molding.  Installations can be as simple as being installed around the perimeter of the room to coffered ceilings with complex staggered moldings and indirect lighting.  Regardless of the type of installation, the material used isn't nearly as important as the quality of the installation.  A master craftsman has to achieve a precision connection between molding boards that, when painted, shows absolutely no lines.  In addition, those connections can't show over time.  A good sign of quality construction is a home with crown molding that doesn't have any cracks in the crown molding.

This is the first article in a series of articles on quality construction in Los Altos Hills luxury homes.  As a buyer or seller, it's important to understand that exceptional quality takes time and money.  My article on quality construction costs goes into more details on how much these things cost.