Los Altos Real Estate Blog

I had a recent client buy a home where the termite inspection ordered by the seller turned out to be wrong.  The buyer, my client, had their own inspection done and it showed drywood termites - in contrast to the original report obtained by the seller.  The second inspection wasn't convincing and since the original inspection company had such a strong reputation, we all decided the termites probably weren't really there.

Big Mistake

My client decided to have the original inspection company come back and take a second look at the places termites were supposed to be.  The inspector CHANGED HIS MIND! and confirmed there were, indeed, termites. This happens and the company that did the work I still hold in high regard.  People make mistakes.  But, the buyer made a decision to purchase at a particular price based on NOT having to repair termite damage.  Who's at fault here?

The Original Termite Inspector

My recommendation to the buyer (my client) was to go back to the original termite inspector and ask them to remediate the issue at little or no cost.  Since their report was wrong, that seemed fair.  The temite inspector agreed and my client is happy with the results.

What To Do When A Home Inspector Is Wrong

• If a conflicting report is available, show it to the inspector
• If the purchase has already been closed, ask the inspector who made the error to fix the issue
• The cost of the fix should be reduced or zero
• Work with the inspector to make sure there is no misunderstanding

Just keep in mind that people do make mistakes and the termite or home inspector should be treated with respect.  A rational discussion of what mistake(s) were made and a reasonable solution will go a long way for all parties.  One key thing to remember is that when an inspection mistake is made it is NOT the fault of the seller or the agents involved.

The local real estate market is now a seller's market, especially for homes in the low-end or median price ranges in many towns.  The hottest markets such as Palo Alto, Los Altos, and Cupertino routinely see homes sell with multiple offers.  Once in a while you'll see a home that goes on the market and sells on Day 0 or within 1-2 days of going on the MLS.  As a buyer, this is frustrating because you didn't get a fair shot at seeing the home to make an offer.  How did it sell so fast?

A Pre-Emptive Offer

A pre-emptive offer is made before the official offer date set by the seller and their agent.  It's usually after the first weekend of open houses on the following Tuesday or Wednesday.  If you write an offer the Friday before the open houses or over the weekend, unsolicited, then it's considered a pre-emptive offer.

Is A Pre-Emptive Offer Good?

Writing an unsolicited pre-emptive offer can backfire if the seller is expecting to see multiple offers and the "frenzy" of the current market.  Your offer undermines that and could be viewed negatively.  However, if you write a pre-emptive offer that meets the anticipated goals of the multiple-offer frenzy they expect, you just might get it.

How Do I Write A Pre-Emptive Offer?

Talk to your agent (me) and I'll talk to the listing agent about the seller's expectations and if they'll take a pre-emptive offer.  If they will take an offer, we'll talk about price and terms that would be appealing.  There is negotiation and diplomacy in getting this done right so everyone walks away feeling good about the transaction.  It's NOT always about price alone.

The success of pre-emptive offers in Palo Alto, Los Altos, and Cupertino is rare but it does happen.  If you're ready and able to move quickly, it could pay off and mean less stress for both you and the seller.  If you're considering buying a home in any of these towns, call me to discuss your needs and the best approach to upcoming inventory.

I'm very proud to work at Sereno Group for many reasons.  The company is comprised of many of the top professionals in the Silicon Valley with proven track records of exceptional sales performance and customer satisfaction.  It's an honor to work here.

In the latest REAL Trends reports, our brokerage ranks in the Top 10 companies in the country in two categories; average sales price and sales volume per associate.  Sereno Group ranked #5 nationwide in the Average Sales Price report with a price of $996,059.  That's nearly twice the median sales price in Santa Clara County and comes from many transactions at the high-end of the market.

Sereno Group ranked #10 nationwide in the Sales Volume Per Agent report with an average of $5,982,249 in properties sold per agent.  This number makes us the #1 brokerage in Silicon Valley in terms of agent production.  What's most impressive is that this figure remained high from last year even while the company continued to expand.  I know my fellow agents are doing excellent, high-quality work and these numbers reflect that.

Overall, Sereno Group ranked #101 among all real estate brokerages nationwide on overall sales volume.  This is up from #124 last year and shows continued growth and strength as a top performing company.  I'm certain that our company will continue this upward trend and I look forward to making my contribution to improving those numbers in 2012.

The real estate market is so hot in Cupertino that an open house this weekend had almost 400 visitors.  That's right, almost 400 visitors! The parking was so bad that people had to walk from the next block just to get to the house.  It was completely packed for over 3 hours each day.  Does that sound like a buyer's market?  NO!  It's a seller's market.

From that crowd the house in question had over 30 offers.  Guess what, that's not the first house and it won't be the last.  The offers that are coming in on homes like this are all going well beyond the asking prices.  The reason for this much interest, in this house particularly, is that there is almost no inventory.  In the Cupertino market there are easily over 100 buyers for nearly any house.  Getting them sold at the highest price is merely a matter of effective marketing and representation.

As a buyer, you need to be prepared to act fast and stay focused.  You may have minutes to make a decision.  I can help you with that decision by telling you what you need to do to win.  The buyers who are winning these homes are generally:

• Well financed or all-cash
• No contingencies
• As-is purchase
• 30 days or less to close (cash in 10 days)
• Very strong price

The biggest one is price.  I understand that buying a home is expensive and you want to save as much as possible.  However, a good agent knows how well homes are selling and the prices they're selling for.  When you're given advice on what to offer - take it!  The Cupertino market is so strong that a nice home in a good location with the best schools will command at least 10% over the asking price and often times close to 20% over the asking price.  If you want to buy, you have to be prepared for this when writing an offer.

The amount of inventory for Cupertino homes priced under $1 million is extremely low.  Those are the homes getting the most attention.  My suggestion for buyers is to see the home as soon as it comes on the market and be prepared to write an offer by the end of the first weekend.  The few homes that have not sold are overpriced and represent excellent opportunities for the savvy buyer.  Call me and I can guide you on which homes offer the best potential.

If you have other areas you're interested in such as Cupertino, Sunnyvale, Los Gatos, Saratoga and select markets within San Jose, then send me an email and I'll send a list for those too. I've also got lists of land in addition to single-family homes and townhouses. Keep in mind that off-market properties vary and are typically at the high-end of the market most of the time.

Saratoga has had a rough time since the real estate meltdown with steep declines in prices, particularly high-end homes, since the market started to crash in 2007.  In 2007 the market peaked with an average selling price of $1,852,777.  In 2008 that dropped to just over $1.8 million then to $1,550,000 in 2009.  While it appears that is a drop of less than 20%, the reality is that the high-end saw prices drop much more.  The trend for high-end homes was 30-40% discounts from their end-of-2007 highs.  Buyers were basically calling all the shots.

The number of closed sales dropped substantially as well while inventory continued to rise.  That's the key issue in the Saratoga market from 2008-2011, inventory was very high.  Where some luxury markets saw inventory taken off teh market, Saratoga had significant inventory for a long time.  This is because there was substantial speculative inventory and entry-level luxury buyers to extended themselves and couldn't hang onto their homes.  In 2008 there were 239 single-family homes sold.  That dropped to 230 in 2009 but rose nicely in 2010 to 288 homes sold.  Last year is was 275.

The average selling price has continued to rise or hold fairly steady since 2010.  That's when the general market recovery started.  However, the excessive inventory has been an ongoing issue.  With lots of choices, prices aren't rising as they are in other luxury markets like Los Altos Hills.  However, with inventory available and better overall value and price apprciation potential in other markets, the recovery is still slow in Saratoga.  The trend so far this year is for a decent number of homes sold and at slightly increasing sales prices.  Sales prices are already rising as buyers scramble for good homes in good locations.  The trend so far in 2012 is:

• Rising prices
• Fewer days on market
• Lower inventory

 

 

 

In most parts of the country there are specific times and days when agents and brokers tour newly listed homes.  The idea is that they get a view of the homes before the general public (home buyers) so they can educate themselves about new inventory and tell their own clients about whatever property looks good.  However, in highly competitive markets there are times, quite a few actually, when the home buyers themselves want that "extra edge" of seeing homes the very hour they're accessible.

Can a home buyer see homes during the broker tour?  Yes!  There are some rules though.  To be honest, most buyers aren't comfortable being surrounded by so many agents but here's what you need to do:

STEP 1:  Find out what day and time the tour happens

STEP 2:  Check with your agent if the home(s) you want to see can be viewed by buyers that day

STEP 3:  Go to the home on tour, but tell the agent present that you're a buyer and you have an agent

STEP 4:  Behave just as you would at an open house

What are the rules for home buyers going on the broker tour of new homes?  Well, for starters, not all homes can be viewed.  Check with your agent to confirm that the seller is OK with buyers coming early.  Here are some other tips:

• Don't bring your entourage.  No kids, no family, no friends.
• Don't take pictures.  If you want your own pictures, come back.
• Be discreet and don't stand out as a buyer.  Dress and act appropriately.

Enjoy the early access and take advantage of the opportunity.  If you're in a market where getting access to homes early is important (as it is in Silicon Valley), get your offer in quickly to take advantage of the edge.

Home buyers are faced with a lack of inventory right now in many markets.  The markets that are seeing new inventory watch newly listed homes come on the market and sell almost instantly.  Normally, this is a sign to sellers that they should put their homes on the market because demand is so high.  However, right now, we're seeing the exact opposite.

If you look at the new listings in Los Altos, Palo Alto, Cupertino, Mountain View, and other towns the number of new listings is smaller compared to years past.  If you take those three towns, collectively they had 127 new listings last February compared to 81 this year.  There were 55 closed sales compared to 64 this year.  So, if you think there's less to choose from, YOU'RE RIGHT!  So, why do we have about 1/3 less inventory this year than last year?

I think sellers are waiting for prices to rise.  Some markets did very well last year.  Palo Alto was up over 10% which is right back to the boom years.  Los Altos was up almost 5% last year.  However, sellers have heard stories of multiple offers, huge price gains, and cash buyers. They all want to see the same thing with their house.  So, my guess is they're waiting for prices to rise a little more so that the sold comparables are high enough to justify higher asking prices.

We'll see how March goes but based on what I can see of the off-market inventory and listings coming soon, March will be underwhelming.  The best way to find a home right now is to work with an agent who has access to substantial "off MLS" inventory or can find a seller before they go on the MLS. 

Being a major real estate website these days almost seems as hard as being U.S. President.  For every person who claims you're great there's one more who says you're terrible.  All the major sites have been in the news for a long time, especially recently, vilified by consumers, agents, and the media for a bunch of flaws.  The PR agents for these firms have their hands full trying to handle all the negativity in a manner that makes sense.  Is it really their fault?  Perhaps not as much as you might think.

DATA, DATA, DATA...

One of the biggest arguments against these sites is that the listings are old, not valid, or not accurate (price, size, etc wrong).  From what I can see, that's the source of the most derision.  BOTTOM LINE:  All the sites have flawed data in one form or another.  REALITY CHECK:  There are a lot of good reasons these companies have the data wrong including:

• The county tax records are wrong
• The agent listed it and forgot it
• The seller (FSBO) listed it and forgot it
• General data entry errors by assistants and others
• Merged records errors

All of these reasons are outside the control of the major real estate websites.  Could they put measures into place to regulate this?  Absolutely.  With millions of records nationwide, it's not a small job.  Take their results with a grain of salt.

STATISTICS, VALUES, AND OTHER INACCURACIES...

Another huge argument against Trulia, Realtor.com, and especially Zillow is how they represent data.  Very few sites offer "sold" information and sometimes the statistics of homes sold, average selling price, and other data points are not entirely accurate.  For example, the Zestimate is deemed useless in many areas because, as Zillow rightfully states, there is a 10% or more margin of error.  Consumers and agents don't pay attention to that fine detail - IT'S JUST AN ESTIMATE.  The desire is to take these things at face value, as if they came straight from the local MLS.  Don't!  If you want accurate market statistics using the entire scope of data, visit the local MLS or, better yet, talk to your local agent.  The stats on many of these sites are what they are, stop blaming them. 

The major real estate websites do the best they can with the millions of property records they have and the millions of consumers accessing them.  At the end of the day, they'll never be as accurate as the local MLS or your local real estate agent.  They're a great place to start, but not the place to stay.  Call an agent and get it right.

I've had a significant number of people call me in the last 3 months asking for help with renting in Silicon Valley.  The reasons are always the same; we're relocating and want to rent while we figure out if we want to buy and where.  While it's understandable wanting to learn about an area before making a buying decision, the strategy of renting first will actually cost you money in the long term.  99% of the rental calls I get are for people relocating and the most common reasons I hear for renting are:

1. We want to make sure we want to stay here (valid)
2. We want to see where the the markets are going (bargain hunting)
3. We want to get to know the area before buying (fear)
4. We want to see what comes on the market (same as #2)

If you're relocating and pursuing renting, then option #1 is the only really valid reason to rent now and hold off on buying.  This is especially true if the relocation is temporary (1-3 year stay).  The other reasons are simply excuses to find bargains or a fear of overspending.  I'm being brutally honest with you.  Here's the reality possible renters need to consider:

• Prices are rising
• The best markets are rising fast
• The neighborhood you rent in may be too expensive to buy in down the line

Let's assume you rent for 1 year while you shop around.  In that year, for example, Palo Alto, Los Altos, and Mountain View will all rise 5-10%.  Given the average selling prices in those towns, that year just cost you $50,000-$170,000 premium.  If you've been renting in those towns, you spent $3000-5000/mo to rent a home at a cost of $36,000-$60,000.  Overall, the cost of renting for a year cost you $86,000-230,000.

If you buy, you get those market gains and the cost of the mortgage is a tax deduction along with some reduction in principal.  Your net interest "cost" with a moderate mortgage will likely be less than $50,000.  So, in reality, waiting costs you more.  My suggestion is to do your homework, let me help guide you to the right neighborhoods, and buy while prices are still affordable.  You'll benefit in the long term.