Recently my family and I vacationed in San Diego, where, naturally, we saw a lot of information related to animals, the environment and global climate change (sometimes called global warming).  We saw films regarding the rapidly shrinking polar bear habitat (due to thinning ice), for instance, and heard that they have a significant risk of being extinct in the wild in the next 20 years. 

Mapped estimation of flooding due to sea level rises of 1, 7 and 14 meters

But what about Silicon Valley? And Silicon Valley real estate?  As the ice melts, sea levels rise.  If or when this trend continues, the San Francisco Bay Area, including Santa Clara County, will be impacted quite seriously.   Where will all the water go?  Our “Natural Hazard Reports” now list things like “dam inundation zones” and “earthquake fault zones” but not rising sea water zones.  

Geology.com has an interactive map which you can view and tinker with (see link at image above or here: http://geology.com/sea-level-rise/san-francisco.shtml) to get a sense of the projected flood areas.  As you might imagine, the low lying areas closest to the bay are most at risk – parts of San Jose, Alviso, Santa Clara, Sunnyvale, Milpitas, East Palo Alto and Mountain View are all threatened. Some of these are already in a 100 year flood plain, which forces buyers to pay for flood insurance and makes homes a bit harder to sell.   How much harder it might be if the water were to begin to rise rapidly….

There are a number of responses to this climate crisis, many of which you may know about such as the effort to reduce carbon emmissions.  Locally, there’s also an effort to restore the wetlands around the south bay as these can help to absorb increases of water from storms (or potentially a rise in sea levels) and also trap carbon. About 85% of the wetlands have been lost over time, so there are many reasons to restore them.  The South Bay Salt Pond Restoration Project has a very helpful website with maps and information. 

Other solutions may arise too.  Having been to Holland, I have to wonder if there will be dikes built to protect certain areas.  Or would we fight the water like they do in Venice, by creating islands of sorts or floating blocks?   Time will tell.  Meanwhile, I see the popularity of the “green” movement becoming more & more relevant each day.

For more information, please watch this public television video “Climate Watch: California at the Tipping Point”.

QUEST on KQED Public Media.

This post was very much inspired by a good friend, fellow Realtor and blogger, Laurie Manny, who died very unexpectedly this week.  I dedicate this post to Laurie, who always encouraged, mentored and inspired many of us.  My blogs have been influenced by her and our friendship, and I will miss her immensely.  I exchanged messages with her on Monday, wrote this on Tuesday (and sent her a note on Facebook to let her know she’d motivated this post), and Wednesday learned that she died sometime between Monday evening and Wednesday morning.  Her influence will continue to be felt for many, many years to come. Rest in peace, my friend.

Recently a friend asked me about the way in which vendors are selected when people buy and sell homes.  In some cases, Silicon Valley home buyers or home sellers know which title company, home inspector, home waranty provider or other vendor to hire.  Most of the time, though, they don’t.  They are hoping that we real estate professionals can put them into contact with good providers.

When working with my clients, for most vendors I provide a trusted  list of sorts.  For the various inspections (roof, chimney, home, pest, etc.) or other service (lender, home warranty, title company) there might be as few as two or as many as six resources listed.  Most often, my clients ask me if I have one or more which I prefer, and most of the time it is one company for each category (I have a favorite termite company, favorite home warranty company, etc.). 

The home buyer or seller in Santa Clara can pick or hire anyone or any company he or she pleases for these various jobs. We agents can and will assist with sharing the names and numbers of those whom we know, like and trust, but at the end of the day, it’s the client who chooses. So really it’s up to the client – he or she can do some research or not.  But if they tell me (as they most often do) to go with my preferred vendor, there’s one in each category and I don’t tend to “spread the business around”.  Over the years, agents tend to build relationships with people in these companies and get a sense of whom they can trust and want to work with. (We agents would hate it if a client with six homes to sell picked six different Realtors to rotate through, too. We tend to want and also to give loyalty.)

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Buying or selling a Silicon Valley home? Be prepared for an onslought of paperwork.  There will be many questions you’ll be required to answer carefully (if selling) or to read and understand thoroughly (if buying) plus many other documents such as  inspections, reports, and boilerplate (templated or generic) disclosures.  Sometimes the language used will be technical or complicated, so you may need to do a little research as you see the questions.  Here’s a list of some of what you’ll be reading or responsible for completing or ordering, not necessarily in this order:

• the purchase agreement, any addenda & contract disclosures (appx 12 -20 pages in most cases)
• a preliminary title report and possibly CC & Rs (Covenants, Conditions and Restrictions)
• if the home is a condo, townhouse or PUD, docs pertaining to the home owner’s association (can run hundreds of pages)
• the standard disclosures common in our area which require the seller to answer questions about the home, yard and area (appx 15-25 pages)
• a natural hazard report (stating whether the home’s in an earthquake zone, flood plain etc.), environmental hazard report (whether there are leaking underground storage tanks and such), tax report (any extra bonds or assessments that will show up on your property tax bill) and other area disclosures ordered by the seller and provided by a company such as JCP, Property ID and other firms (appx 80 pages)
• inspections: usually pest and home are ordered, often also chimney, roof, possibly others such as pool or other specific components of the home (varies but often at least 40 or 50 pages, frequently more)
• for buyers: disclosures on their loan
• for sellers: the listing agreement and disclosures related to it
• at the time of signing the final papers: escrow instructions and lots of forms for transferring title – you will also see the reports seen previously too
• additionally, some real estate brokerages have a lot of their own disclosure forms too
• if the sale is a relocation, there will be a lot of relo papers to complete as well
• if it is a short sale or bank owned home, you will have extra paperwork for that also

By the time it’s all said and done, you will have reviewed several hundred pages of paperwork that are several inches high if stacked. All of this can make consumers a little bit crazy, particularly when there forms which are very nearly duplicates. (It may be a little less if it’s a trustee sale or probate, but only a little less.)

Why is there so much of it?
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How important is the marketing of homes for sale in Silicon Valley?  First it’s important to understand what we mean by the term marketing: generally, it is the way we attract potential buyers to the homes for sale.  This is more than just the flyer or newspaper ads.  It includes:

• pricing the home
• photographing the property
• describing the home on the MLS (and including good pictures)
• the quality of the flyers
• the print advertising
• the online advertising & exposure
• the networking with other agents
• the direct outreach and appeal to consumers
• the accessibility of the home
• staging the home to sell (appeal, cleanliness, no odors, etc.)

Marketing can be good, bad, or somewhere in between. Bad marketing will likely cost sellers money and good marketing will likely make them money.  

Today we’ll go over the most important elements of marketing because sellers should evaluate them when hiring a Realtor to assist them in the marketing and sale of their home.  While there are many areas of marketing, the most crucial, by far, are these three: pricing, photos, and the description on the MLS.

Pricing:  The biggest marketing mistake which is commonly seen is overpricing.  Sellers sometimes believe that their home is worth more than the buying public do and a home will remain unsold no matter what else is done right.  In fact, you could fly airplanes aroud the home and put full page color ads in every paper around the world but if the home is overpriced, it still won’t sell!  Pricing is the most important part of marketing.   With a too-high price, traffic will be diminished and offers will be low at best (lower than actual market value).

Of course, most homes are worth not just one exact dollar amount but somewhere within a range of prices, depending on terms, the speed of the sale etc.  If the pricing is well done and the rest of the marketing is also quite good, the home ought to sell on the high end of what is possible at that time.

Pricing mistakes are very costly and very easy to make.  Here are some of the ways which sellers can be misled about the probable market value of their home:

• using old comps
• relying upon online home valuations
• basing their home’s sale price on what they “need”
• hiring an agent based on his/her suggesting the highest list price (we call that “buying the listing” when an agent overstates value to secure the listing)
• expecting 100% back from all improvements done to the home
• believing buyers can “always make an offer” (if it’s overpriced, they usually won’t)
• thinking there’s no harm in just reducing the price later (if the market is going down, you will be “chasing the market down”)

The one thing that neither the sellers nor their Realtors control is the real estate market, which is fickle and can change.  In recent years it’s been up and down, depending upon location, price point, school districts and more.  Using six month old comparable sales to establish current market value just isn’t appropriate.  Sometimes even the most recently closed sale is not enough, especially if the market is sliding.  Instead of just relying on the solds, also look at the pendings and the current competition.  The less competition your home has, the better odds you have of selling it – and for more.  But a surge of inventory will cause home values (including yours) to drop.   To understand the probable buyer’s value, all of these must be factored in together.  (The online valuation sites do not do that.)

I should add that it is harder to sell a property that has issues such as high voltage power lines, deferred maintenance, messy tenants who make showings difficult, busy road, junky neighbors, or some other undesirable element.  Many agents will suggest a lower price to compensate for whatever issue is hurting the marketability of the home.

While it’s true that there is no problem that a better price cannot fix, most sellers are trying to maximize their sales price.  For that reason, I’d always suggest asking your real estate agent if there’s anything that can be done to improve the market value aside from that lower price.  Sometimes fresh paint and carpet and a professional house cleaning can do wonders for the home’s saleability.  Or giving tenants a lower rent in exchange for their cooperation during the sale will create an easier time for buyers wanting to see and purchase your home.   A little effort may have a great payoff.  (Some agents focus almost exclusively on price and may not be worried about any other element of marketing.  This is a mistake, so be aware that you may run into an agent with this belief.)
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If you are purchasing a condominum or townhouse in Silicon Valley, you will need to consider a few things more than if you were buying a house that’s not held in condo ownership*.

Like what?

Most of all, with a condo or townhome (or planned unit development) you are buying a fraction of the entire complex as well as your own living space (condo or townhome). Condominium ownership includes a percentage of the community’s property. You will benefit from it, but you also will be responsible for it.

Additionally, there are a lot of  documents to read and understand when purchasing a condominium or town house. You will need to be able to accept the rules, bylaws, financial statements, meeting minutes, articles of incorporation and more.  You will want to read the newsletter (and minutes) carefully to see if there are any “issues” in the complex.  Plan to invest several hours in reading and digesting the information in the 2-3″ stack of papers.

Naturally another difference is that your neighbors will be in very close proximity.  If you are a non-smoker but the neighbor in the unit next door smokes, you may not be too happy about it later.  A few months ago I showed a Rivermark (Santa Clara) townhouse that was just darling but the next door neighbor came out and smoked on the front porch while we were there.  My buyers didn’t want to purchase the home for that reason – they did not want to deal with the smell later. You may have similar concerns about other odors or noises. 

Perhaps most important are the financial issues and risks:
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Stop by downtown Saratoga’s Wildwood Park (20764 4th Street off Big Basin Way) on Sunday 8/8/2010 from noon to 6pm to enjoy an afternoon of free music plus activities & entertainment for kids, including an appearance by a magician!  A variety of bands will be onstage, and Saratoga’s own Mike Gurley will be performing too.

This is a benefit for the Susan G Komen breast cancer research fund, so will be a live auction and donations would be very much appreciated.

In some parts of Silicon Valley, by crossing a particular road or driving a few feet, the whole look, feel and pricing of an area can change.

Bel Estos Drive near Rosswood Drive in San Jose

This is true for Rosswood Drive at Union Avenue in Cambrian Park.  On both sides of the intersection, there are many homes of 1200 to 1400 square feet (some larger too) all built around the same time.  Both are San Jose 95124 addresses.  Both are good areas – but the 2000 and 2100 blocks are  nicer than the 1800 & 1900 blocks of Rosswood and those homes sell for more. Why? What makes one area sell for more than another?

In the case of Rosswood Drive, part of it has to do with the beautiful canopy of trees that line the two thousand block of Rosswood and the adjoining streets (Bel Escou, Bel Canto, Bel Estos, Esther, etc.). Part of it is just that the homes are a little better maintained.  Historically, Union used to divide the schools too, and that used to be part of the higher prices – but that’s not really the case now.  (A similar jump happens along Los Gatos-Almaden Road by Harwood too – same builder, Leep, but prices nudge up just a little for homes closer to Blossom Hill Road.)

How can you tell, from looking at a neighborhood, how it compares with nearby streets in the same part of town generally?  Sometimes you cannot know from looking alone (for example a flood plain, earthquake fault or school boundary won’t show), but I’ll give you some cues as to what makes areas more or less desireabile visually.

These are some things I teach my San Jose area buyers to watch out for (lower values) in terms of appearance and sounds:
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