Internet Property Tools

The dramatic change that the internet has brought is in giving control back to consumers. This is especially true in real estate. Not too long ago you had to contact a Listing Agent to request a "CMA" or home value report. Now you can get them at sites like mine www.Evaluate-My-Home.com or sites like www.Zillow.com (see my May 25th blog for the good and bad of that service.

Worse in the old days was that you could never find complete home information unless you called the Listing Agent. You'd see wonderful photos of homes in magazines or newspapers, but there would be no price, or no property address and other critical pieces of information. Now Realtor Association "MLS" (multiple listing service) sites usually give buyers 95% of the information they want. Some are still pretty bad like the San Francisco site at www.SFARMLS.com which is slow and clunky with a weird seeming "District" search tool. How is a Buyer to know that District 7D is "Cow Hollow"? So while it gives you the information, there are better ways to get to the same data. Many third party companies are creating over-lays to get more user-friendly access to the San Francisco MLS. I pride myself on providing Buyers with "best of class" internet search tools and am one of the few Realtors in San Francisco to offer two of the best sites:

1. www.SF-MLS-Search.com is a way to search the MLS via a Map. You can choose to search by District, or by zip code, or address, but the Map search is by far the most popular

2. www.CleanOffer.com is a "private" site that claims to have "complete" data. But Buyers like it because you can exclude "in escrow" or "active contingent" properties which are those where the Seller accepted an offer but the offer still has some "contingencies". In San Francisco about 90% of these properties end up selling, so it's annoying to find a property that you can't actually buy. CleanOffer allows you to only see "Active" properties. Plus it allows you to save your favorite properties, and save your searches, among other things. On CleanOffer you must register and select an Agent who has pre-subscribed for you. I've done that, so if you don't have an agent, feel free to enter "Rob Regan" as your agent.

All of the above services are free. Bookmark them and come back time and again. And if you see other great internet real estate tools that I don't offer, please tell me about them so I can decide whether they're worthy of me giving you free access.

40 year mortgage & other exotic loans

I just saw a quote from a lender I work with showing the difference between a 30 year and a 40 year fixed rate mortgage. I was a bit surprised that on a $500,000 loan at 7% you only save $219 per month. What that means is you can afford $33,000 more loan by going with the 40 year fixed. If you've got $100,000 in cash for a downpayment, and can purchase either a $600,000 or a $633,000 Condo, that really isn't that much help.

On the other hand, why not get a 40 year fixed? Chances are you won't be in your Condo for all 30 or 40 years. Many people want to pay down their mortgages as quickly as possible so that they can own their home free and clear. This would be a nice thing to have, but then again, even our current 7% mortgage interest rate is extremely low historically. You also get the benefits of "leverage". If your $600,000 condo increases in value by 5% you've generated $30,000 in new wealth. If you only have $100,000 invested in the condo that is a 30% return on your investment. If you knew you could pay 7% interest to generate a 30% return, you'd do it in a second. If you've paid off your condo and own it free and clear, you generate the same $30,000 but it's only a 5% return and you've got a full $600,000 tied up in your home that can't be used in other investments elsewhere.

So I like the 40 year fixed loan. What has changed is that I'm not as much of a fan of the interest only ARM's. Many "experts" think these were always bad loans. But if you got a 10 year fixed ARM and sell in 5 years, you never face the dreaded adjustable years of your mortgage. Last year you could save 2% or more in interest between a ARM and a fixed rate loan. Now the difference is a 0.3% or 0.4%. That is only $126 monthly difference. Of course you also get the added benefit of not having to pay the principle in the interest-only ARMs. That's just over $400 on a $500,000 loan.

So instead of being able to afford a $600,000 property with $100k in downpayment you can now afford a $700,000 condo. This DOES make a difference. After 5 years of paying interest only vs. a fixed rate, its $35,000 in principal, or $98,000 over 10 years. So is it worth being able to afford a bigger, nicer place and trust that your property will appreciate enough to make it worth it? That's a decision only you can make.


Making "low ball" or under asking offers

With a slower market more and more buyers are making low offers. The last few years nearly every property sold well above the Listing price. These days, Buyers are hearing that the market has slowed and often making below-asking offers within a few days of a property being put on the market. Even though virtually none of these offers are being accepted, you see buyers persist for months making offer, after offer wasting everyone's time. Instead, that Buyer (and his or her Buyer's Agent) ought to ask what they can do differently to get a "low-ball", or at least a lower than Asking offer accepted.

I have several suggestions:

1. expect most of these offers never to be accepted. If you find your dream home and really want the property, make a "serious" offer that the Seller will actually consider

2. do your homework on the property's value, and be prepared to defend your offer with the Seller and/or Listing Agent. Most Sellers find low offers insulting, so do what you can to soften the blow. Come prepared with market stats and comparable properties that sold close to your offer. If you don't have a ryhme or reason, they'll likely toss your offer in the circular file and not return your phone calls.

3. you should probably hold off making a low offer until the property has been on the market for at least 3 weeks. At about the 3rd week (at least in the fast moving San Francisco market) Sellers start to get anxious. If they have not received any offers, and your offer comes in $100,000 below their asking price, which might be $150,000 below what they had hoped to get, this is probably the first time during the listing period where they'd take your offer seriously.

4. be professional and be nice - don't fax over a sloppy offer with no prior contact, no evidence that you've ever visited the property, and without some of the essentials that go with offers like a pre-approval letter for any loan you may be getting and a copy of your "earnest money" check. And you or your Agent ought to drop the offer off in-person in a professional looking package. Low offers are usually not taken seriously, so make it a serious looking offer at the very least.

Before writing a "low ball" offer put yourself in the shoes of the Seller and try to figure out when, how and why they might consider your offer. One last piece of advice is to call the Listing Agent and ask about the activity of the listing. Just making this connection with the Listing Agent will help any offer you might make down the road, and the information can't hurt. I'm continuously amazed when Buyers fax over sloppy offers, like throwing a piece of bread on a hook into the ocean, and wondering why they can't catch a fish or a house.