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.
6/17/06
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.
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.
6/6/06
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.
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.
5/31/06
Bubble or not?
Nothing has changed, half the experts think there is a bubble, half don't. Still few people recognize that every market - even from one neighborhood to the next, and sometimes one street to the next, is reacting very differently from each other. One neighborhood may have already had their bubble burst seeing a 10% drop in prices from the peak, while another neighborhood is still selling homes quickly, at higher prices from the previous year, previous quarter and previous month.
So the question you ought to ask yourself is "what about 'MY' market?". I can help you answer that if you email me at robr@kw.com. Tell me the property you are interested in, and what you love about it, and what you wish was different. I can run a Trend report to help indicate where your property has been, and where it might be going in terms of price.
My view of the San Francisco market based on numerous Listings, CMA's (single property Comparable Market Analyses) and from conducting my own Trend reports, is that some parts of the city have already had the bubble burst seeing 10% or more price reductions over their peak. These are "less desirable" areas to Buyers. What I mean by that is if a Buyer can have everything, they usually want to be within walking distance to dining, shopping and coffee shops. They want the neighborhood to feel safe, look clean, and they don't want to live on a loud street. I had a Twin Peaks listing. Now Twin Peaks has a LOT going for it, but the Condo sold for a lot less than it was worth last year because every buyer who loved the Condo eventually backed away because they couldn't walk to either the Castro or Haight shopping districts. Those buyers probably bought a somewhat smaller condo "closer in" so that they could walk. And those areas have NOT dropped in value. They've either held their value or even gone up slightly.
Buyers are kicking the tires right now. During the bidding wars of the last few years Buyers had to act in days on a property they liked. Now they can take weeks to evaluate every home and area of interest. One condo with a deeded deck, in-unit washer/dryer and a view WILL sell quickly at top dollar vs. a very similar unit with no deeded outdoor space, where you must visit the building's laundry room, and has no views.
Will this eventually translate into a drop in the ENTIRE San Francisco market? Some people believe it will. I just don't see that happening for many areas that "have it all" and for properties that "have it all". These are still in VERY high demand. I just had a Buyer offer $900,000 all cash on a Condo. With that kind of money fairly typical in this town, and virtually no new construction in the most sought after parts of town, there can not be a drop of any significance.
So the question you ought to ask yourself is "what about 'MY' market?". I can help you answer that if you email me at robr@kw.com. Tell me the property you are interested in, and what you love about it, and what you wish was different. I can run a Trend report to help indicate where your property has been, and where it might be going in terms of price.
My view of the San Francisco market based on numerous Listings, CMA's (single property Comparable Market Analyses) and from conducting my own Trend reports, is that some parts of the city have already had the bubble burst seeing 10% or more price reductions over their peak. These are "less desirable" areas to Buyers. What I mean by that is if a Buyer can have everything, they usually want to be within walking distance to dining, shopping and coffee shops. They want the neighborhood to feel safe, look clean, and they don't want to live on a loud street. I had a Twin Peaks listing. Now Twin Peaks has a LOT going for it, but the Condo sold for a lot less than it was worth last year because every buyer who loved the Condo eventually backed away because they couldn't walk to either the Castro or Haight shopping districts. Those buyers probably bought a somewhat smaller condo "closer in" so that they could walk. And those areas have NOT dropped in value. They've either held their value or even gone up slightly.
Buyers are kicking the tires right now. During the bidding wars of the last few years Buyers had to act in days on a property they liked. Now they can take weeks to evaluate every home and area of interest. One condo with a deeded deck, in-unit washer/dryer and a view WILL sell quickly at top dollar vs. a very similar unit with no deeded outdoor space, where you must visit the building's laundry room, and has no views.
Will this eventually translate into a drop in the ENTIRE San Francisco market? Some people believe it will. I just don't see that happening for many areas that "have it all" and for properties that "have it all". These are still in VERY high demand. I just had a Buyer offer $900,000 all cash on a Condo. With that kind of money fairly typical in this town, and virtually no new construction in the most sought after parts of town, there can not be a drop of any significance.
5/25/06
Zillow vs. "CMA"s (home valuations)
www.Zillow.com is all the rage. Input any residential property address (well, almost any) and instantly find the estimated market value of the home. Neat huh? You no longer need a Real Estate Agent to help you figure out the value of your home when you are Selling, or a home you are interested in Buying - right? WRONG! IN CAPS! Here is the link to Zillow's accuracy report: http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm
In San Francisco they currently have a margin of error of 4.3% which is $32,250 on an average priced $750,000 home. Now I don't know about you, but paying $32,000 too much for a home, or selling a home for $32,000 too little, is REAL CASH. That's a LOT of money. You can't buy it for $32,000 less because Zillow says so - no Seller will just use Zillow and give that money away. And you can't sell for $32,000 more because no Buyer will just rely on the number and give that extra money away. Zillow also states that they are "within 10% of Selling price" 76% of the time. Huh??? So you really screw it up 24% of the time, and the other 76% you are within 10%? So for the property you are interested in, how will you know if the report is accurate or not, and if it's off up or down?? Answer: you don't!
Now let's compare a Realtor provide "CMA" (Comparative Market Analysis). To be honest some agents just run a quick report that takes them 5 minutes and their accuracy is only slightly better than Zillows. Why better? Because they have better data with their local MLS (Multiple Listing Service) access to recently sold homes. But a good agent who is looking out for the best interest of their client might spend 3 hours pouring over all available data - including photos of the comparable properties, the marketing remarks describing the property, the locations of each property and more. Only after finding 5 or more "truly" comparable properties will that agent deliver the "CMA" with confidence that the property is likely to sell with 1% of the report or less.
Zillow is fun. Zillow is NOT a replacement for painstaking research of the most recent information - and not just numbers and data - but of photos, locations (1 block can often make a HUGE difference in value), public and agent-only marketing remarks, and so on. I've got a home listed for sale right now at 2295 Vallejo Street - Zillow can't know that the building just passed a special assessment of $19,330 for this particular condo to repaint the building and give the unit new double paned windows. Will this effect value? Of course. Zillow can't know that this particular condo has a super high-end remodel job, and a million dollar view of the Golden Gate Bridge and San Francisco bay. And Zillow doesn't know why one comparable 1 block away sold for $800,000 while another sold for $1.3 million. But I can!! I'm an agent with access to ALL of the available information to help me determine the true market value of any San Francisco property. Plus, when I'm stumped because the data is all over the place, I can then call the Listing and the Buying agents of all of the Comparable properties that recently sold and ask them for their opinions and for clarifications on each of the properties.
No matter how smart Zillow gets, they can not replace a Realtor who painstakingly does the research to estimate the fair Market Value of a property. Agree or disagree? Please share you opinion.
In San Francisco they currently have a margin of error of 4.3% which is $32,250 on an average priced $750,000 home. Now I don't know about you, but paying $32,000 too much for a home, or selling a home for $32,000 too little, is REAL CASH. That's a LOT of money. You can't buy it for $32,000 less because Zillow says so - no Seller will just use Zillow and give that money away. And you can't sell for $32,000 more because no Buyer will just rely on the number and give that extra money away. Zillow also states that they are "within 10% of Selling price" 76% of the time. Huh??? So you really screw it up 24% of the time, and the other 76% you are within 10%? So for the property you are interested in, how will you know if the report is accurate or not, and if it's off up or down?? Answer: you don't!
Now let's compare a Realtor provide "CMA" (Comparative Market Analysis). To be honest some agents just run a quick report that takes them 5 minutes and their accuracy is only slightly better than Zillows. Why better? Because they have better data with their local MLS (Multiple Listing Service) access to recently sold homes. But a good agent who is looking out for the best interest of their client might spend 3 hours pouring over all available data - including photos of the comparable properties, the marketing remarks describing the property, the locations of each property and more. Only after finding 5 or more "truly" comparable properties will that agent deliver the "CMA" with confidence that the property is likely to sell with 1% of the report or less.
Zillow is fun. Zillow is NOT a replacement for painstaking research of the most recent information - and not just numbers and data - but of photos, locations (1 block can often make a HUGE difference in value), public and agent-only marketing remarks, and so on. I've got a home listed for sale right now at 2295 Vallejo Street - Zillow can't know that the building just passed a special assessment of $19,330 for this particular condo to repaint the building and give the unit new double paned windows. Will this effect value? Of course. Zillow can't know that this particular condo has a super high-end remodel job, and a million dollar view of the Golden Gate Bridge and San Francisco bay. And Zillow doesn't know why one comparable 1 block away sold for $800,000 while another sold for $1.3 million. But I can!! I'm an agent with access to ALL of the available information to help me determine the true market value of any San Francisco property. Plus, when I'm stumped because the data is all over the place, I can then call the Listing and the Buying agents of all of the Comparable properties that recently sold and ask them for their opinions and for clarifications on each of the properties.
No matter how smart Zillow gets, they can not replace a Realtor who painstakingly does the research to estimate the fair Market Value of a property. Agree or disagree? Please share you opinion.
5/19/06
Staging and what it means to Buyers & Sellers
I have a new listing, check it out at http://www.2295VallejoSt.com. I interviewed 6 stagers and got 6 very different quotes. The most expensive was $5,000 for one month with each extra month at $1,000. The cheapest was $1,300 and is who we went with. This particular stager is a friend of a friend of both me and the Seller which is why I trusted her to do a good job despite the really inexpensive quote. I was half right and half wrong. I'm fairly confident that had I hired yet another stager who quoted $5,000 for 2 months, that I would have gotten an gorgeous looking staging job that was very thorough and complete. With the Stager we did hire the place looks pretty sparse (we needed to take out a lot of over-sized furniture and replace it with smaller modern pieces) and we're having her come back today to add some items and some "warmth". My guess is that the end result won't be as ideal as I would have liked or the $5,000 quote would have gotten, but it's "decent".
So what does this all mean for you the Seller or Buyer. Stagers make huge claims about how much faster homes sell for, and how much more they sell for vs. non-staged homes and empty homes. I've personally had vastly different impressions of homes when I've seen them staged and unstaged, and have to agree in general that staged homes would get a lot more interest. So it would behoove Sellers to hire stagers. The question for Sellers is how much to spend and who to hire, and in general I would advise that you base that on the kind of home you have. If you have a high end luxury style home you should make sure you hire a stager who specializes in luxury homes. Chances are you'll spend more, and $10,000 quotes are fairly common. If you have a home in a working class neighborhood with a 20 year old kitchen, you can get away with spending less for a basic staging job.
In hindsight I might have advised my current seller to go with the $5,000 two month quote because they seemed more in tune with the "luxury" modern look and feel we need for my current listing. In the end, we do have a pretty good staging job, and I'll update this Blog as to how the interest level is over the next week or two. Hopefully saving the $3,700 won't cost us $5,000 or more in the final sales price. Which is how Seller's need to look at this particular expense. If it costs $10,000 in staging to sell it for $20,000 more, and saves one month of selling time and carrying costs of your mortgage, it MORE than pays for itself.
Buyers on the other hand - if you find an unstaged home that needs a paint job, you're probably in luck "IF" you can see past it. There will be less interest, and the home can be purchased for less. But so many buyers just can't see past the "ugly" home. Paint and stage it with nice furniture and all of a sudden it's a "beautiful" home. So Buyers - try to train yourself to look past the staging for what the home really looks like, and train yourself to then compare those to the unstaged homes and you'll likely save yourself some money when Buying.
So what does this all mean for you the Seller or Buyer. Stagers make huge claims about how much faster homes sell for, and how much more they sell for vs. non-staged homes and empty homes. I've personally had vastly different impressions of homes when I've seen them staged and unstaged, and have to agree in general that staged homes would get a lot more interest. So it would behoove Sellers to hire stagers. The question for Sellers is how much to spend and who to hire, and in general I would advise that you base that on the kind of home you have. If you have a high end luxury style home you should make sure you hire a stager who specializes in luxury homes. Chances are you'll spend more, and $10,000 quotes are fairly common. If you have a home in a working class neighborhood with a 20 year old kitchen, you can get away with spending less for a basic staging job.
In hindsight I might have advised my current seller to go with the $5,000 two month quote because they seemed more in tune with the "luxury" modern look and feel we need for my current listing. In the end, we do have a pretty good staging job, and I'll update this Blog as to how the interest level is over the next week or two. Hopefully saving the $3,700 won't cost us $5,000 or more in the final sales price. Which is how Seller's need to look at this particular expense. If it costs $10,000 in staging to sell it for $20,000 more, and saves one month of selling time and carrying costs of your mortgage, it MORE than pays for itself.
Buyers on the other hand - if you find an unstaged home that needs a paint job, you're probably in luck "IF" you can see past it. There will be less interest, and the home can be purchased for less. But so many buyers just can't see past the "ugly" home. Paint and stage it with nice furniture and all of a sudden it's a "beautiful" home. So Buyers - try to train yourself to look past the staging for what the home really looks like, and train yourself to then compare those to the unstaged homes and you'll likely save yourself some money when Buying.
5/16/06
Inspections
It's hard to imagine someone walking into any kind of property that is in an obvious state of dis-repair or has a lot of deferred maintanence, and not paying $300 to $500 to a contractor for a property inspection. Another $500 will get you a "Pest" inspection which not only looks for termites, but is looking for mold and dry rot. But I did recently hear of a women who did just that, and once in her condo discovered numerous defects that she blamed on everyone but herself. Normally you'd expect to still have a claim against the Seller for failure to disclose known defects, but in this case the Seller lived elsewhere and used it as a place for his relatives to crash whenever they visited San Francisco. Whether he knew about the mold and dry rot damage that the Buyer found after moving in is nearly impossible to prove. This Buyer also purchased directly from the Listing Agent without getting the free advice of a Buyer's Agent. While the Listing Agent is required to disclose any defects they're aware of, and are required to do a reasonable visible inspection, they also have you sign a disclosure stating that they are not experts in this very area. And you sign other disclosures that clearly state that they recommend you get inspections done. This Buyer chose to sign all of these disclosures, yet ignore all of the advice. While it is no longer a "buyer beware" rule of law and the motto of agents and sellers these days is "when in doubt, disclose, disclose, disclose" you still can't bury your head in the sand when buying and just trust that it will be all right in the end. Hire a Buyer's Agent when buying, and take heed when they recommend you get inspections, especially on obviously older properties in poorer condition.
5/15/06
To Condo or not to Condo: HOA Dues 101
There's more to HOA dues than most Buyers realize. Many Buyers see low dues as a great thing, afterall every $70 in dues is another $10,000 in mortgage (at 7%) you could have used to buy a bigger place. So a condo with $200 HOA dues should be worth $40,000 more than a condo with $480 dues. But there's more behind the curtain, especially in low HOA buildings, and especially in older Condo buildings. For one, low dues usually means low reserves. Reserves are there for a rainy day, or in San Francisco to take care of the effects of too many rainy and foggy days. When the roof needs to be repaired, the exterior painted, original windows replaced, or any other numerous things that need repair over time. With low dues and low reserves, if it's discovered or decided that the exterior needs to be replaced, it can cost each homeowner $10,000 and higher. A recent owner I know had to pay over $30,000 for one special assessment to replace the rotting exterior of the building. Some buildings being run by HOA Boards that are trying to be cheap for too many years end up with lists of needed repairs that are endless, so the "special assessments" to all owners to pay for the repairs ends up being endless.
If you're lucky enough to time your stay there before such repairs are discovered, you'll have the benefit of having paid less to live in a home. But if those repairs are discovered before you sell, you MUST disclose the problems. I recently heard of a women who bought her condo without the use of a Buyer's Agent who could have advised her about the necessity of getting an inspection and of carefully reading through the Seller provided disclosures. Instead she just contracted through the Listing Agent and ignored that agent's not so strongly pushed recommedations to do the same. Immediately after moving in she discovered a mold smell coming from the closets, and that she could put her finger through the wall near her sliding glass doors. Now she's blaming the Listing Agent, the HOA, and anyone else she can think of. Don't make the same mistake (or other mistakes) yourself by not considering the age of the building, the maintenance (or lack of in her case) of the condo you're buying, the Seller disclosures including the HOA Minutes and the annual budget including reserves.
Obviously this a lot for Buyers to do, which is why Buyer Specialist Agents are so important. This particular buyer also paid the Listing price on a condo that had been on the market for months. I assume she thought she was saving money by not using a "free" agent to represent her, but my guess is she could have bought the condo for a lot less than asking, AND be forewarned about all of the repairs and problems with the unit. For more on my Buyer Specialties visit http://sanfranciscohomes.yourkwagent.com/home
I live in a Condo myself, so I don't mean to discourage anyone from buying one. They tend to be much more affordable than Single Family Homes in San Francisco, and often the only option in the below $700,000 price range. But full awareness of potential problems is a good idea, and reading a few posts over at this site will give you an idea of problems you might find: http://forum.freeadvice.com/archive/index.php/f-106.html
A more favorable write up of the Pros of Condo living can be found here: http://www.realtytimes.com/rtcpages/20051115_hoaliving.htm
If you're lucky enough to time your stay there before such repairs are discovered, you'll have the benefit of having paid less to live in a home. But if those repairs are discovered before you sell, you MUST disclose the problems. I recently heard of a women who bought her condo without the use of a Buyer's Agent who could have advised her about the necessity of getting an inspection and of carefully reading through the Seller provided disclosures. Instead she just contracted through the Listing Agent and ignored that agent's not so strongly pushed recommedations to do the same. Immediately after moving in she discovered a mold smell coming from the closets, and that she could put her finger through the wall near her sliding glass doors. Now she's blaming the Listing Agent, the HOA, and anyone else she can think of. Don't make the same mistake (or other mistakes) yourself by not considering the age of the building, the maintenance (or lack of in her case) of the condo you're buying, the Seller disclosures including the HOA Minutes and the annual budget including reserves.
Obviously this a lot for Buyers to do, which is why Buyer Specialist Agents are so important. This particular buyer also paid the Listing price on a condo that had been on the market for months. I assume she thought she was saving money by not using a "free" agent to represent her, but my guess is she could have bought the condo for a lot less than asking, AND be forewarned about all of the repairs and problems with the unit. For more on my Buyer Specialties visit http://sanfranciscohomes.yourkwagent.com/home
I live in a Condo myself, so I don't mean to discourage anyone from buying one. They tend to be much more affordable than Single Family Homes in San Francisco, and often the only option in the below $700,000 price range. But full awareness of potential problems is a good idea, and reading a few posts over at this site will give you an idea of problems you might find: http://forum.freeadvice.com/archive/index.php/f-106.html
A more favorable write up of the Pros of Condo living can be found here: http://www.realtytimes.com/rtcpages/20051115_hoaliving.htm
5/13/06
Condo or not to Condo: the NOISE issue
When considering condos there are several important items to research and consider. One is noise. If you're not on the top floor, can you hear your upstairs neighbor, and if so, how much? Some buildings are built so poorly that normal walking upstairs actually shakes the lower apartment. Other buildings you can't hear anything when the person upstairs is jumping up and down. You might think you're in the clear if you purchase a top floor unit, but if you buy into a building that actually shakes, your downstairs neighbor will be knocking on your door within the first 2 weeks of your purchase suggesting that you buy slippers, extra rugs, and in some cases will be downright beligerent or ignorant of the fact that it's not your fault simple walking is so noisy.
So what do you do when buying a condo? Check the CC&R's for rules about floor coverage. Some require 100% carpeting, usually with the exception of closets and the bathroom(s). Others have high percentage floor coverage like 70% so you must have a large area rug in the all living spaces. Still others have no rules at all. In 100% or high coverage condos you can buy a bottom floor condo and get hardwood floors if that's your preference and feel fairly confident that noise levels will be low. But I strongly suggest you do a test for noise. Ask to get access to the upstairs apartment to do a test. If they say you can't, press for it. Chances are the person above you would rather have any issues arise before you move in vs. you knocking on their door and complaining all of the time. And the Listing Agent and Seller would rather avoid a troubling law suit after you're in. So they may all comply - a quick tip - request this after you are in contract, but make sure you've got an Inspection Contingency from which you can make this request.
You can also do your own tests without getting into the upstairs condo. Walk around the condo with heavy steps. See if you can tell if it's causing shaking or seems like it's making loud noises. And one final tip, buildings built in the 60's, 70's and early 80's seem to be most prone to louder noises and shaking. Ask your real estate agent what he or she thinks about each building you visit if noise is an issue for you. And if noise isn't an issue, you'll get to buy more affordable places.
Ahh - one last tip. Bottom floor units that are actually the second floor because the ground floor is the lobby and garage.... if your condo is above the garage, make sure you do a test of the garage door opening and closing to see if the noise and/or shaking effects your condo. Usually this can be fixed or at least reduced, but it can still be an issue.
So what do you do when buying a condo? Check the CC&R's for rules about floor coverage. Some require 100% carpeting, usually with the exception of closets and the bathroom(s). Others have high percentage floor coverage like 70% so you must have a large area rug in the all living spaces. Still others have no rules at all. In 100% or high coverage condos you can buy a bottom floor condo and get hardwood floors if that's your preference and feel fairly confident that noise levels will be low. But I strongly suggest you do a test for noise. Ask to get access to the upstairs apartment to do a test. If they say you can't, press for it. Chances are the person above you would rather have any issues arise before you move in vs. you knocking on their door and complaining all of the time. And the Listing Agent and Seller would rather avoid a troubling law suit after you're in. So they may all comply - a quick tip - request this after you are in contract, but make sure you've got an Inspection Contingency from which you can make this request.
You can also do your own tests without getting into the upstairs condo. Walk around the condo with heavy steps. See if you can tell if it's causing shaking or seems like it's making loud noises. And one final tip, buildings built in the 60's, 70's and early 80's seem to be most prone to louder noises and shaking. Ask your real estate agent what he or she thinks about each building you visit if noise is an issue for you. And if noise isn't an issue, you'll get to buy more affordable places.
Ahh - one last tip. Bottom floor units that are actually the second floor because the ground floor is the lobby and garage.... if your condo is above the garage, make sure you do a test of the garage door opening and closing to see if the noise and/or shaking effects your condo. Usually this can be fixed or at least reduced, but it can still be an issue.
Why Read this Blog - helping Buyers & Sellers one San Francisco home at a time
Today I'm changing my blog to dedicate it to all San Franciscans thinking about buying or selling a home within the city. The goal - to give lots of information, whether it's market stats, tricks to buying for less, and tips for selling for more, and so on.
Given the high expense of San Francisco real estate, every decision is that much more difficult and important, and it's my belief that the more information Buyers & Sellers have, the better. As an agent I deliver a huge amount of information to my clients. I also give them access to the best tools I can find. For example, CleanOffer.com is the best search tool for home buyers, but it requires a $500+ annual subscription by an Agent for a Buyer to get access to it. I was not only one of the first to subscribe, I was also one of their beta testers. In another year or so my guess is that most agents in the city will be subscribers, but by that time I'll be on to the next best thing for my clients... always trying to give my clients an edge.... the same kind of edge I'll be trying to blog over to you for free just for showing up to this site. Enjoy, and let me know what you'd like to hear about at any time.
Sincerely,
Rob Regan
415-652-3780
www.RobRegan.com
Given the high expense of San Francisco real estate, every decision is that much more difficult and important, and it's my belief that the more information Buyers & Sellers have, the better. As an agent I deliver a huge amount of information to my clients. I also give them access to the best tools I can find. For example, CleanOffer.com is the best search tool for home buyers, but it requires a $500+ annual subscription by an Agent for a Buyer to get access to it. I was not only one of the first to subscribe, I was also one of their beta testers. In another year or so my guess is that most agents in the city will be subscribers, but by that time I'll be on to the next best thing for my clients... always trying to give my clients an edge.... the same kind of edge I'll be trying to blog over to you for free just for showing up to this site. Enjoy, and let me know what you'd like to hear about at any time.
Sincerely,
Rob Regan
415-652-3780
www.RobRegan.com
4/4/06
Bubble Update
Here's one link on one important point:
http://www.russwhitneyblog.com/2006/03/is_the_real_estate_bubble_goin_1.html
That Real Estate markets are local, so you can hardly compare the dot-com bubble bursting to real estate. I'd like to take this one step further to point out the importance of location and what "local" means. In my previous post I was refering to 4 very different listings in 4 parts of San Francisco. Well, one of those 4 got four offers, all over asking, with the highest offer setting a record for that particular condo building. The listing was in the "Marina District" of San Francisco which is always highly sought after. So prices have continued to climb. Another of my listings we reduced the price twice, and it has finally sold. Some one elses Blog picked up my Craigslist ad that I posted for the Twin Peaks condo that had "price reduction" written into it, and used the ad to "prove" that there's a bubble. Well first off, this Blogger didn't pick up the listing that got 4 offers. Secondly, they had no idea that my Seller on the "price reduced" listing over priced in the first place.
But, my true point is that the "price reduced" listing was on Twin Peaks 1 mile from the nearest Starbucks or restaurant. Buyers loved the place, but continually passed over the listing saying "but it's too far away from the action for me". This truly was a "location" issue. The Marina District listing was only 5 miles away from the Twin Peaks listing, yet those 5 miles made a world of difference. Both are in San Francisco, both were one bedroom condos, both had lots of people coming through to view the properties. But one was 1 block from a shopping area, and 5 blocks from restaurants and night life and got a $702,000 offer. The other only got a $535,000 offer because it was away from the "action". The $535,000 offer on Twin Peaks was a definite drop in appreciation from last year in that neighborhood and that building. The $702,000 was a definite INCREASE in appreciation from last year in both the neighborhood and in the building.
So who is right in their Bubble opinion? Well, everyone is probably a little right, but I say anyone who is generalizing is mostly wrong. Real Estate markets are local, and the difference of 5 miles can be as dramatic as the difference in States 3,000 miles away from each other.
And in both cases, I think there is ENORMOUS opportunity for savvy buyers. Another way at looking at this is that there is no such thing as a "savvy renter" unless they are investing in rental properties elsewhere.
http://www.russwhitneyblog.com/2006/03/is_the_real_estate_bubble_goin_1.html
That Real Estate markets are local, so you can hardly compare the dot-com bubble bursting to real estate. I'd like to take this one step further to point out the importance of location and what "local" means. In my previous post I was refering to 4 very different listings in 4 parts of San Francisco. Well, one of those 4 got four offers, all over asking, with the highest offer setting a record for that particular condo building. The listing was in the "Marina District" of San Francisco which is always highly sought after. So prices have continued to climb. Another of my listings we reduced the price twice, and it has finally sold. Some one elses Blog picked up my Craigslist ad that I posted for the Twin Peaks condo that had "price reduction" written into it, and used the ad to "prove" that there's a bubble. Well first off, this Blogger didn't pick up the listing that got 4 offers. Secondly, they had no idea that my Seller on the "price reduced" listing over priced in the first place.
But, my true point is that the "price reduced" listing was on Twin Peaks 1 mile from the nearest Starbucks or restaurant. Buyers loved the place, but continually passed over the listing saying "but it's too far away from the action for me". This truly was a "location" issue. The Marina District listing was only 5 miles away from the Twin Peaks listing, yet those 5 miles made a world of difference. Both are in San Francisco, both were one bedroom condos, both had lots of people coming through to view the properties. But one was 1 block from a shopping area, and 5 blocks from restaurants and night life and got a $702,000 offer. The other only got a $535,000 offer because it was away from the "action". The $535,000 offer on Twin Peaks was a definite drop in appreciation from last year in that neighborhood and that building. The $702,000 was a definite INCREASE in appreciation from last year in both the neighborhood and in the building.
So who is right in their Bubble opinion? Well, everyone is probably a little right, but I say anyone who is generalizing is mostly wrong. Real Estate markets are local, and the difference of 5 miles can be as dramatic as the difference in States 3,000 miles away from each other.
And in both cases, I think there is ENORMOUS opportunity for savvy buyers. Another way at looking at this is that there is no such thing as a "savvy renter" unless they are investing in rental properties elsewhere.
2/15/06
State of the market
I wrote this in early February, and never finished for published it - I was about to write an update on the market - but much of what I wrote two months ago is still true - so here is the old post:
Everyone wants to know the state of the San Francisco real estate market. Of course, everyone ALSO has their own opinion. Usually the opinions I hear are based on limited anecdotal information like "I heard there were 5 offers on this one property, so the market is picking up." Of course someone else will say, "this seemingly attractive property is just sitting on the market with no activity, so it's clear that the market is slow."
I have 4 listings right now, in 4 very different parts of the city, which gives me signifcantly more anecdotal information than the average real estate agent. The first thing I can say is that each listing is very different from each other. So I've realized that I simply have 4 times as much anecdotal information, and not necessarily hard-core facts, and a difinitive answer. But after much analysis of Active (for-sale) properties, and of recently Sold properties, I think I've come to some conclusions that will make some sense of the very wide variety of opinions I'm hearing. And here they are:
1. Fewer properties are selling right now, in fact, my research shows that there were 20% fewer sales in San Francisco this January vs. last January, and the last time it was this slow was 2001.
2. Prices are up 13% this January over last January
3. But, prices are down over the top of the market just a few months earlier by roughly 10%
4. Homes are taking nearly twice as long as normal to sell
5. Two mortgage brokers have told me they've got tons of new applications, but not a lot of actual mortgages - which means lots of prospective buyers who are not buying. On the same hand, I've had very active Open Houses, that aren't translating into offers.
So fewer homes are selling, and taking longer to sell, but there are lots of buyers out looking. Since some homes are selling, you start to ask why some are, and some aren't, and I think the answer is two-fold.
1. Since buyers have more time to make decisions, and aren't facing multiple offers, they can be very picky. If a home doesn't match 90% to 100% of their criteria, they're just passing over it.
Everyone wants to know the state of the San Francisco real estate market. Of course, everyone ALSO has their own opinion. Usually the opinions I hear are based on limited anecdotal information like "I heard there were 5 offers on this one property, so the market is picking up." Of course someone else will say, "this seemingly attractive property is just sitting on the market with no activity, so it's clear that the market is slow."
I have 4 listings right now, in 4 very different parts of the city, which gives me signifcantly more anecdotal information than the average real estate agent. The first thing I can say is that each listing is very different from each other. So I've realized that I simply have 4 times as much anecdotal information, and not necessarily hard-core facts, and a difinitive answer. But after much analysis of Active (for-sale) properties, and of recently Sold properties, I think I've come to some conclusions that will make some sense of the very wide variety of opinions I'm hearing. And here they are:
1. Fewer properties are selling right now, in fact, my research shows that there were 20% fewer sales in San Francisco this January vs. last January, and the last time it was this slow was 2001.
2. Prices are up 13% this January over last January
3. But, prices are down over the top of the market just a few months earlier by roughly 10%
4. Homes are taking nearly twice as long as normal to sell
5. Two mortgage brokers have told me they've got tons of new applications, but not a lot of actual mortgages - which means lots of prospective buyers who are not buying. On the same hand, I've had very active Open Houses, that aren't translating into offers.
So fewer homes are selling, and taking longer to sell, but there are lots of buyers out looking. Since some homes are selling, you start to ask why some are, and some aren't, and I think the answer is two-fold.
1. Since buyers have more time to make decisions, and aren't facing multiple offers, they can be very picky. If a home doesn't match 90% to 100% of their criteria, they're just passing over it.
1/25/06
Prices of Homes
San Francisco homes are priced BELOW market when they are listed for sale. Yes, that's right. If you're going to fight it, you can't buy here. It's pretty normal for first time home buyers to rail against this pricing tactic. And that's what it is, a tactic, or a strategy. We (SF real estate agents) under-price homes in hopes of generating lots of traffic and multiple offers.
First time home buyers often get mad when they discover that $599,000 really means $660,000 or sometimes $730,000. To discover the real value of a home you're interested in you need an expert to run a comparable report. Called "CMA" for Comparative Market Analysis, these look at nearby, similar homes that have sold very recently. If 5 similar homes sold between $625,000 and $675,000 in the last 3 months, then the home is worth between $625,000 and $675,000. Sorry, you can't have it for $599,000 because 10 other buyers will out-bid you. An "expert" can be an appraiser, but is usually a local real estate agent who has access to complete sales and listing data, and is good at crunching numbers and determining which homes really are comparable.
The reason I'm writing this post isn't for you, the first time San Francisco home buyer. It's for the out of town agent who is advising their client. You can't, and you shouldn't. Our market isn't like yours, and your access to home sales data is probably pretty poor. On one home I've had two problems. First is the Sacramento agent who helped my client buy a home up there before putting her home here on the market. That agent led her to believe her $800,000 to $850,000 home was worth at least $900,000. Now I've got a much closer East Bay agent advising his Buyer clients to make a $750,000 offer when I've priced the home at $795,000. When I called the agent to let him know that my Seller was actually offended by the offer, he was dumbfounded saying he had run comparables. Yes, there were nearby sort of similar homes that sold for an average of $750,000, but they were actually quite different. Just a few blocks away is "the other side of the tracks" according to neighbors. That's probably a $50,000 or more difference. My client's home also has views probably worth $50,000, etc, etc.
So we'll see what happens with these Buyers. They'll probably pass on a great house all because they can't recover from the shock of the "real" price. So, you out of town (including across the Bay) real estate agents. Please refer your SF buyer to an SF agent.
First time home buyers often get mad when they discover that $599,000 really means $660,000 or sometimes $730,000. To discover the real value of a home you're interested in you need an expert to run a comparable report. Called "CMA" for Comparative Market Analysis, these look at nearby, similar homes that have sold very recently. If 5 similar homes sold between $625,000 and $675,000 in the last 3 months, then the home is worth between $625,000 and $675,000. Sorry, you can't have it for $599,000 because 10 other buyers will out-bid you. An "expert" can be an appraiser, but is usually a local real estate agent who has access to complete sales and listing data, and is good at crunching numbers and determining which homes really are comparable.
The reason I'm writing this post isn't for you, the first time San Francisco home buyer. It's for the out of town agent who is advising their client. You can't, and you shouldn't. Our market isn't like yours, and your access to home sales data is probably pretty poor. On one home I've had two problems. First is the Sacramento agent who helped my client buy a home up there before putting her home here on the market. That agent led her to believe her $800,000 to $850,000 home was worth at least $900,000. Now I've got a much closer East Bay agent advising his Buyer clients to make a $750,000 offer when I've priced the home at $795,000. When I called the agent to let him know that my Seller was actually offended by the offer, he was dumbfounded saying he had run comparables. Yes, there were nearby sort of similar homes that sold for an average of $750,000, but they were actually quite different. Just a few blocks away is "the other side of the tracks" according to neighbors. That's probably a $50,000 or more difference. My client's home also has views probably worth $50,000, etc, etc.
So we'll see what happens with these Buyers. They'll probably pass on a great house all because they can't recover from the shock of the "real" price. So, you out of town (including across the Bay) real estate agents. Please refer your SF buyer to an SF agent.
1/24/06
Buyers Use of the Internet to find Homes
The National Association of Realtors released a results from a study of Home Buyer and Sellers showing increasing reliance on the internet as a source for searching for homes. A summary of this this study can be found at the NAR site here:
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/HmBuyerSellerSurvey06?OpenDocument
In 2005 77% of Home Buyers used the Internet to search for homes. That's up from a mere 2% in 1995. 90% used Agents and 71% said they used Yard Signs. This is mere conjecture, but it is my belief that reliance on the Internet would be even higher in San Francisco, and the use of Yard Signs much lower. The reasons are obvious - most of us don't have yards, and don't spend Sunday's driving around browsing lawn's and house fronts for homes and areas we might want to live in. That's a suburban phenomonon. Plus, San Franciscan's are probably some of the most web and tech savvy on the planet, so it's likely we skew much higher for internet use in general, and real estate specifically.
I personally didn't need the NAR to convince me that more and more Buyers were using the internet since I use the Internet for just about everything. Need a definition for a word - I have no idea where my dictionary is, so I just Google it. Need a new piece of furniture, a rug, to find the nearest Post Office... the internet, the internet, the internet. So as a Real Estate Agent I've gone out of my way to find the best house hunting tools on the web, and then bring them directly to my Buyers and Sellers.
Buyers have told me that CleanOffer.com is by far the best home search tool, so I've pre-paid for an unlimited-client subscription. Register at www.SF.CleanOffer.com and select me as your agent and you get unlimited use of this service.
Sellers - instead of the nationally advertised site HouseValues.com, try my local San Francisco site www.Evaluate-My-Home.com
Buyers - want email alerts on properties of interest? Try www.Automated-Homefinder.com
Want access to the MLS try www.SF-MLS-Search.com
I can make recommendations for the best internet Mortgage Calculators (BankRate.com), and know exactly where to find various San Francisco departments for Variances, Property Tax info, Building Permits, and much more - all on the internet. Email me with any of your San Francisco real estate questions, and I'll most likely email you back with a site that does the best job of giving you the information clearly and concisely. Try me :)
http://www.realtor.org/PublicAffairsWeb.nsf/Pages/HmBuyerSellerSurvey06?OpenDocument
In 2005 77% of Home Buyers used the Internet to search for homes. That's up from a mere 2% in 1995. 90% used Agents and 71% said they used Yard Signs. This is mere conjecture, but it is my belief that reliance on the Internet would be even higher in San Francisco, and the use of Yard Signs much lower. The reasons are obvious - most of us don't have yards, and don't spend Sunday's driving around browsing lawn's and house fronts for homes and areas we might want to live in. That's a suburban phenomonon. Plus, San Franciscan's are probably some of the most web and tech savvy on the planet, so it's likely we skew much higher for internet use in general, and real estate specifically.
I personally didn't need the NAR to convince me that more and more Buyers were using the internet since I use the Internet for just about everything. Need a definition for a word - I have no idea where my dictionary is, so I just Google it. Need a new piece of furniture, a rug, to find the nearest Post Office... the internet, the internet, the internet. So as a Real Estate Agent I've gone out of my way to find the best house hunting tools on the web, and then bring them directly to my Buyers and Sellers.
Buyers have told me that CleanOffer.com is by far the best home search tool, so I've pre-paid for an unlimited-client subscription. Register at www.SF.CleanOffer.com and select me as your agent and you get unlimited use of this service.
Sellers - instead of the nationally advertised site HouseValues.com, try my local San Francisco site www.Evaluate-My-Home.com
Buyers - want email alerts on properties of interest? Try www.Automated-Homefinder.com
Want access to the MLS try www.SF-MLS-Search.com
I can make recommendations for the best internet Mortgage Calculators (BankRate.com), and know exactly where to find various San Francisco departments for Variances, Property Tax info, Building Permits, and much more - all on the internet. Email me with any of your San Francisco real estate questions, and I'll most likely email you back with a site that does the best job of giving you the information clearly and concisely. Try me :)
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