Some Silicon Valley home buyers do not want to have their own buyers agent, but instead expect that they can find properties in the San Jose area that they want to see and request that the listing agent show it to them in a private appointment.  These same potential buyers may be surprised that the listing agent may refuse to show them the listing outside of a regularly scheduled open house – that is, if the seller is permitting open houses.

What’s going on?

In earlier articles we’ve discussed the need for a buyer broker agreement (verbal at the least, but possibly in writing) and why you, as a buyer, ought to have your own representation at the negotiation table.  (If you missed these, see the links under “related reading” below.)   Today I want to dispel the myth that the listing agent is required to open up and show condos or houses for sale to anyone who calls and requests seeing them and explain why that’s the case.

Showings of homes for sale are determined by the listing agreement or contract between the home seller, the listing agent or Realtor and the broker

The most important thing for buyers to understand is that the accessibility of the home for viewings depends upon the agreement, verbally or in writing, between the owner of the property and the agent/brokerage hired to market, negotiate, and sell the real estate.   It’s not an “on demand” situation where an interested buyer can insist on seeing the property as desired. Here are some of the expected scenarios and reasons why showings are somewhat restricted most of the time:

• Some properties are tenant occupied and it may be the case that you cannot even see the house or condo until after your offer is accepted. Most often it will be challenging to see homes with renters in them, but it is possible, usually, to see them prior to purchasing. (This is less true with duplexes, triplexes and four plexes. Apartment buildings are always sold “subject to inspection”.)
• Other times there may be a restriction such as 24 or 48 hours notice required for showings when homes are owner occupied.
• Most of the time, the seller has requested that any private showings, by appointment, involve ONLY pre-approved buyers. The sellers don’t want to waste their time with tire-kickers.  They want serious buyers.
• Most of the time, a seller will not want the listing agent to also represent the buyer and will expect serious home buyers to have a buyer’s agent.  If you are working with your own agent, that’s who should show the home to you.  If you have your own buyer agent, he or she can see what is involved in showing the property to you by looking at the agent version of the MLS (which includes showing instruction information and restrictions)
• Some sellers want open houses, some don’t.  For those selling a home during the holidays, often the for sale sign and lock box are removed and it becomes harder to get into these properties.
• Safety is a HUGE concern, both for home owners selling on their own and for realty professionals. Each year, Realtors and other real estate professionals are injured or killed in their line of work. If this surprises you, ask yourself how smart is it to meet total strangers at an empty house? It’s not.  If you want the listing agent to show you the house, expect to be asked a lot of questions (are you preapproved? if so, with who? how can we verify that?) and usually expect to meet the agent at the office first. Many Realtors will ask to photo copy your driver’s license prior to taking you to the home – this is for personal safety reasons. We realize that you will feel uncomfortable but please remember that real estate is risky for us and we absolutely must be cautious.

Related reading:

Do You Need a Buyer’s Agent? Or Should You Find a Home, Then Use the Listing Agent?

Silicon Valley Home Buyers: Should You Use a Buyer Broker Agreement?

Yesterday I attended a property inspection in San Jose and we found an unwanted resident in the garage: a black widow spider. In case you haven’t seen one, I thought I’d share the pic here (photo courtesy of home inspector Duane Serrano of Tri Star Inspections).

Needless to say, she’s not there anymore!

CC & Rs are “Covenants, Conditions and Restrictions“  (sometimes “Covenants, Codes & Restrictions).  They are a set of rules drawn up for a neighborhood or subdivision by the builder or by a board comprised of the builder and a few others who want to set the neighborhood standards to keep property values up.

The C, C & Rs  are put in place, usually for a set number of years such as for 30 or 35 years, and most of the homes in Silicon Valley do have CC & Rs and most of them are now expired.   It’s always for a finite period of time, though usually extendable if the neighbors vote it in again (which I have never seen done), but sometimes gauged by something perhaps not so predictible.  The weirdest time line I ever saw referenced something like “until the death of the last living great grandchild of…” and it mentioned one of the Kennedys. Odd, but apparently legit.

What are the CC & Rs about?

Here’s a peek at part of one -

Usually the CC & Rs dictate the minimum size of a home (e.g., the home must be at least “X” number of square feet)  that may be built in the subdivision, the setbacks (homes must be so many feet from the street and property lines), what kind of signage may appear (only for sale and for rent signs, for instance), and normally there’s a restriction on farm animals so that people may not raise goats, sheep, chickens and so on in their backyards or breed animals professionally.

Many years ago, some C, C & Rs also had restrictions on who might buy or live in a neighborhood (racial, religious and other restrictions).  This is illegal today, of course, and so the first page of any C C and R document you see now will have a large disclaimer stating that any fair housing violations are illegal and are null & void. Since the C C & Rs “run with the property”, they supposedly cannot be amended (though I have never been convinced that they couldn’t be – just that the government chooses to require the disclaimer instead).

Do the C C & Rs matter?

For the most part, they are irrelevant because in most of Santa Clara County, they have long since expired.

They can be a little helpful, though, as sometimes the setbacks (which may still be enforceable) may be stated more clearly than in the preliminary title report or elsewhere.

Often, too, they hide some historically interesting tidbits. Today I read the C C & Rs for a Leep built home (a very good builder of tract housing in the Santa Clara Valley) in the Cambrian Park area of San Jose.  I know that there’s an area of Campbell (that has a Los Gatos mailing address) with Leep homes;  one street in this area near the Saratoga and Los Gatos border is named Elwood and another Bearden. Today I learned that there were two builders of these homes, Elwood J. Leep and Leonard Bearden, Sr. So that was a fun tidbit – I have sold many “Leep homes” over the years, have known them to be well built but never had the builders’ first names before.

To summarize, in most cases, the C C & Rs won’t provide you with a lot of helpful information, but do try to obtain them anyway when buying a home in Santa Clara County. There may be information that is interesting, if not necessarily useful – and you never know, there may be a tidbit of helpful information buried in there along with the strange admonitions that homes not cost less than $10,000 when sold. That’s the least of our worries today!

If you’re a Silicon Valley homeowner, you will sometimes need to replace elements of your home, such as the roof or water heater, or do repairs or remodeling to keep the home functional, comfortable, and efficient. Kitchens and bathrooms need to be updated from time to time, and sometimes remodeled. These repairs and remodeling projects often (if not always) require permits and finals.

Will you apply and pay for the required permits and finals?

What difference does it make if you do or do not get them?

Will it matter when you sell your home?

If you’re a Silicon Valley homebuyer, the whole idea of buying a home without all the necessary permits is a bit spooky.  My buyer clients often hear or read something like “garage conversion done – permits unknown” or “kitchen remodel done by contractor but without permits”.  They worry about the consequences of buying homes with non-permitted work, so let’s talk about the issues involved.

What is the risk in having non-permitted, non-finalled work done in a home (for both buyer and seller)?

Having non permitted work is risky for a few reasons. 

One of the biggest risks is safety.  Although there’s no guaranttee that work with permits and finals was done properly, the odds that the work is properly and safely done are improved that this is the case with a second set of eyes and an official standard at hand.  Non-permitted work is lacking the checks and balances that having a city, town, or county inspector invovled provides.

Another big risk is that the insurance may not cover a claim if damage was caused by non-permitted work.  For instance, let’s say you had some electrical work done that wasn’t permitted, and a fire was later caused by faulty wiring.  Your insurance company may not pay out on your policy if the cause was something non-permitted, non-finalled.

What about resale?  Other issues with non-permitted work involve  selling the home later. Buyers can get spooked by non-permitted work, and this can pull the price down (it’s a bit of a stigma).  Appraisers and realty professionals typically will not value non-permitted remodels as highly as remodeling done with all the required documentation – this can be a huge problem.  Some appraisers will count a remodeled kitchen as worth ZERO dollars if there are no permits and finals.  (That’s extreme.)   More typically, non-permitted remodeling may count at half the value of a properly documented job. Lastly, not to be underestimated in the current climate, there are  lender concerns (they may not fund if there’s a worry about the home, legal square footage, or value of improvements).  FHA appraisals and loans have very stringent standards so this could be a problemmatic area.

Why would a homeowner NOT get permits and finals?  Sometimes property owners skip the paperwork and “hoops” because they are ignorant and do not know any better. It is not always intuitively obvious when something needs a permit, and requirements vary from place to place. Sometimes they want to just do a job themselves (this is not uncommon with electrical engineers here in Silicon Valley doing a little wiring of this or that in their homes) or feel it’s just another cost and don’t want to bother.

Also it is not unusual for contractors to quote two prices: one if the seller has the contractor deal with permits and finals, and a different, lower price if that element of the project is skipped.  Tight on money? (Who isn’t, these days?) That’s a place someone might elect to cut a corner. So economics sometimes plays a role in the choice.

What about the government? In terms of city, town, or county government, usually there’s not a threat that non-permitted work will be removed,  but there’s no guarantee of that in terms of room additions or home expansion. Sometimes other work may be done that requires a permit, and perhaps the inspector won’t “final” that until everything is in compliance. Early in my real estate career I had a listing with an illegal addition and that room had to be removed before we could close escrow. 

How hard is it to fix non-permitted work later?  Truthfully, it varies. Sometimes it’s simply a matter of paying a few dollars more. Other times, though, the code may have changed and you’ll get stuck ripping out what would have been ok when the work was done but forced now to bring it up to “current code”.  It is a whole lot easier, and cheaper in the long run, to simply do it right the first time.

Any other words of advice with permit paperwork in Santa Clara County? Yes: if you do the work and get it “signed off”, KEEP A COPY IN A SAFE PLACE. Government offices, like any office, sometimes misfile, lose, or accidentally destroy critically important information. Do not, under any circumstances, rely on someone or some office to keep accurate records on your behalf.  If you cannot later prove that you did the work with permits and finals, you’ll be at a major disadvantage. Keep copies in a safe place!

Related articles:
Building Permits Are Online and Easy to View in San Jose
Monte Sereno Building Permit Nightmare (on my Live in Los Gatos blog)

Last week I got an email from someone who’d seen a Silicon Valley house she liked from a real estate agent whom she didn’t like.  She wondered, “do I have to buy the house with that agent?” 

The answer, of course, is not always clear. It depends on your relationship with the agent.  It may also depend on why you choose to buy the home with someone else’s assistance.

(1) Your relationship with the real estate agent

Did you sign a buyer broker agreement with that Realtor? If so, you may owe a commission to her if you buy the home through someone else.

Did you write an offer on that property with the agent? If so, again you may owe a commission to him if you hire someone else to help you purchase it afterwards. 

In many cases, there is a verbal contract that you are working with a Silicon Valley real estate professional exclusively. This does “count” too but it may be easier to change your status if it’s a verbal agreement.

(2) Problem agents, problem consumers.  Do you want or need to break the relationship with your current agent? 

Is your agent giving too pushy? Doesn’t seem to know what he or she is doing?  Too hard to reach?  Too busy to really assist you? Or doing something else that you perceive as a “red flag”?  Sometimes agents should be fired. 

You most likely can break that agency relationship with a problem agent if it’s a verbal contract only and you haven’t written an offer on the property in question, but you must  clearly tell him or her that you are not going to continue working together and then have a gap in time between then and when you do write an offer on the home (at least a few days, if not a few weeks).  You can break the agency relationship verbally or in an email or both, but it needs to be clear so that there is no misunderstanding. A call or voice mail followed up by an email would be very clear.

You can terminate the agency relationship  very nicely and graciously, of course.   It is not necessary to tell him or her why you are electing to discontinue the relationship, but he or she will certainly wonder so you may nicely share your reasons.  I would just say try to be pleasant and thank the agent for the time spent.

Sometimes there are a few problem consumers working with ill-will who think that they can work with an agent, see a lot of homes, and then simply either go directly to a seller or listing agent or bring in an out of area friend or relative to write up the offer and close the deal.  If a consumer does this not because of a difficulty with the first agent but just in order to save money (or get a rebate) etc., it is possible that the first salesperson will cry “foul!” and press to be paid a commission.  The lawsuit in this case would be what’s called a “procuring cause” lawsuit.  Procuring cause means that the first agent was really the reason why the consumer purchased the home, and therefore is entitled to a commission (which the buyer might be forced to pay if doing a last hour agent switch).

A good example of a procuring cause lawsuit is the case of Jerry Seinfeld, who had to pay his agent $100,000 when he bought a home without her because he could not reach her one day.  Impatience will cost you!

(3) Discussing expectations.

Sometimes Realtors don’t clearly discuss expectations upfront and that can lead to problems all around.  If you are thinking of buying or selling a home, talk to prospective agents about how they work, communicate, make themselves available etc.   There are many commonalities between agents but also many differences.  

Some agents will preview everything in sight and show you the best six or seven homes and expect you to choose from their list after one time out. Others may be willing go to twice and show a few more.  (Most consumers do buy a home after seeing less than 15 nationally but here it tends to be a larger number, probably because of our higher price tags.)

Other agents will expect you to find the home on your own and call them when you find the right one.

(4) What do you want? How do you want to be working with an agent?

In most cases, real estate professionals only get paid if there’s a sale and it closes escrow.   Some will request a buyer broker agreement, which is like a listing contract but for a buyer.  Make sure it’s not for too long of a period, and that if you are really unsure there’s a cancellation clause.

There are some other options out there, though, besides the tradional arrangement as to how a real estate professional can be compensated for assisting you with your real estate needs. 

Paid consulting (hourly or flat fee) is a newer option that might fit in some cases. For instance, if you think you want help from an agent only up to a point but then want an out of area licensee (friend or relative) to help you write an offer and negotiate the escrow, perhaps an option would be to hire someone to show you homes and prep you for an hourly fee.   (Learn more about consulting by visit the site for the Accredited Consultants in Real Estate, a group to which I belong.)

Another option is to consider teaming up. Perhaps your out of area friend or relative would be willing to either split the escrow OR pay a referral fee as compensation for time and energy spent.

An open discussion with your real estate professional about your wants, needs, hopes and expectations will enable your relationship to be stronger and better, and will be one less area for stress as you take the plunge into homebuying.

A year ago October, I attended the National Association of Realtors convention in San Francisco and met a highly successful, very experienced and decorated (awards, designations) agent from the east coast. When I asked her which part she was from and worked in, she rattled off about 4 large counties. (I’m familiar with the area, so wondered where she was within it.) She did not want to tell me where her office was because she sold in all four or so large areas. She had what I considered to be a huge turf! Her idea of “local” was over 50 miles in diameter – maybe 70 miles or more!

Some agents claim huge territories where they work!

And then a  month or so ago, my husband, Jim Handy, and I attended a party at a lovely home in Santana Row and one of the guests asked me where I worked.  I told her that  I sell all over Silicon Valley, mostly in the “west valley communities” of Los Gatos, Saratoga, Campbell, Almaden Valley and Cambrian Park, but I have listed and sold all over. This gal wanted me to tell her that I worked only in Los Gatos, or only in Cambrian Park or Almaden Valley etc. and it was hard for her to imagine I would really work all of the San Jose area.  Just last week I got a similar question from someone who lives and works in Los Gatos – she seemed to think that agents who work in one town only work in that town.

Some home owners have the same mis-perception that agents only work a very tiny region, such as just Los Gatos or just Saratoga.

Let’s do some quick math to explain why this isn’t the case. In Los Gatos, there are about 800 to 1000 agents. Those agents sell in town, but also in Cambrian, Campbell, Almaden, Monte Seren0, all over San Jose, etc. In Los Gatos, the average number of homes (condos, townhomes and houses) sold over the last 7 years is 39 per month, which is 78 “sides” of the transaction (buyer side and seller side),  or 936 sides per year. The average number of transactions that a Los Gatos agent will have in Los Gatos is one a year.  Of course, there are many who do not sell in town at all, and there are a few who sell a large percentage of the homes.  Some of the top producers in Los Gatos do not have their license in the town, but perhaps in adjoining Saratoga or somewhere in San Jose.

Agents don’t make a living doing one transaction per year, of course. Those 800 or 1000 Realtors in Los Gatos are also selling in nearby areas of Silicon Valley. Some may have a much larger territory still.

How important is it to be a “neighborhood expert”?  It used to matter a great deal, before the internet and the free access to information, for someone to hire a “neighborhood expert” (which by the way, when on a rider sign means nothing – anyone, any agent, can by this little sign and put it on the for sale sign).  In most communities, though, the information is readily available. It is imperative that the real estate professional know the general area, but not necessarily the track or that particular zip code. If the agent has sold within a few miles (3-5) of the property, it’s usually close enough for our metro area. I have run into sellers who only want to hire someone who has sold in their particular subdivision before. Honestly, that’s a little silly. The best agent for you and your home may have sold a block away – don’t eliminate him or her because of a micro- proximity issue!

So those are extremes I’ve run into - agents who advertise huge swatches of areas (and some sellers who want knowledge on a micro-local level.

As for my real estate practice. . .

I will literally go the extra mile for a good, decent, honest person who is reasonable about the market etc.  On my website and in most of my communications I have put “Helping Nice Folks to Buy & Sell Homes in Silicon Valley Since 1993″. But of course I don’t want to sell in areas where I don’t know anything. That would not be doing my clients any favors.

I mostly sell in Los Gatos, Saratoga, Cambrian Park, and Almaden Valley. But I just closed a listing in Sunnyvale, and do sell all over, from Santa Clara and downtown San Jose to the Blossom Valley area to Willow Glen. My focus, though, is on the four regions mentioned above. I’ve lived all over Santa Clara County and  I have sold in every part of the county except Gilroy, where I have shown homes but not sold any. I would feel comfortable showing any part of the valley floor, or the suburbs like Silver Creek, Almaden, Berryessa, etc.. Additionally, I have sold in Fremont, in Redwood Shores, and in Scotts Valley.  I normally limit myself to Santa Clara County, though.

I do not sell the mountains. This is not a distance issue, but it’s a matter of mountain homes being a speciaIization I don’t possess or want to develop. I would be the wrong person to list a home in the mountains or to sell in the mountains and I refer clients out to good ”mountain agents” for these homes out because my inclination would be to talk people out of living there!!

So for me, all of Santa Clara County (except the mountain homes) are an OK area to sell.

Last year I listed and sold a home in Scotts Valley. Those wonderful past clients and friends of mine weren’t sure if Los Gatos was too far or not. How “local” is “local enough”? It’s actually only 30 minutes “over the hill”. I told them I would not blame them if they wanted a more proximate agent, but that if they wanted me, I would love to help them and would work hard to learn everything I could to do a great job for them. They decided to hire me. We sold quickly and at a good price. I think they would heartily say that a half-hour’s drive is not too much if the client hires a good, hardworking, experienced agent. 

In Silicon Valley, there are 8000 Realtors and about another 4000 real estate licensees who are not Realtors. About half of them have been in the business for 5 years or less. If there are 4000 experienced Realtors to choose from here, it should not be necessary to hire someone from Stockton! Agents from several counties away have different issues that they deal with – agricultural issues that do not impact, say, Cupertino. So my advice is: hire someone good & experienced within a half hour of you if you are in the Santa Clara Valley. Agents from Oakland or Brentwood do not know this market so do think local. Not micro-local, but close enough to keep an eye on new listings (for buyers) and to easily service the listing (sellers).

Home sellers want to get as much as possible for their homes. Home buyers want to get their homes for the least amount possible.  “Market value” is when buyers and sellers agree – even if one of them is a little reluctant. This is true universally, whether you’re in the market in San Jose, Saratoga, Los Gatos or anywhere in Silicon Valley (and just as true elsewhere in California or elsewhere in the world).

Real estate agents don’t control the value of the home. However, good agents can maximize the potential of the market. Homes are never worth just one set price. There’s usually a range within which terms (or conditions) can move the value up or down. It’s “price and terms”.

For instance, let’s say you have an upscale home that’s worth about 1.5 million, more or less. If an offer were to come in contingent upon the sale of another home, in a normal or balanced market, the seller would probably want more than the 1.5 because of the uncertainty. Perhaps that home would sell, if contingent, for 1.6 million (only for illustration). On the other hand, if an all-cash buyer showed up, could close in 5 days (I have seen it happen) and allowed a free rentback for a month, the home might sell for closer to 1.4 million – if the seller really needed a fast close to prevent foreclosure or to secure the deal on another home. It’s always about price and terms.

Want a good deal on price? Sweeten the terms.

For sellers, you could offer terms such as carrying back part of the loan. Some new home sellers, builders, are throwing in incentives like boats with waterfront homes. Now that’s a sweet term! Another “seller term” could be lease-to-own (see a real estate attorney before doing the lease to own, though).

For buyers, the most common “sweet term” is as-is. Other terms could be a fast close and  free rentback. With elderly sellers, often the offer to leave any debris behind is met with enthusiasm. (It’s the cans of paint, the pile of lumber, the junk in the top of the garage that they just don’t have the energy to deal with.)

But back to the original question: how much will the seller come down? 

Usually not as much as the buyer wants!

Most of the time, homes sell within 3% of list price, and with highly desired homes, sometimes more than list price. Sometimes a home will sell 5% off list price. Rarely will a home sell 10% under list. A good agent working with the seller will not take 10% under, but would instead do a price reduction of 5% to see if the home wouldn’t sell closer to the 5% “off” instead of the 10% off. In my experience, it is only very poor agents whose listings sell at 10% off or more.

With my buyers, I encourage them not to look at homes priced over what they can actually afford. If they simply must look a little higher on the hope that the sellers will come down, my suggestion is to top it at 5% over except in extreme circumstances. Some buyers simply believe that they can deeply discount the seller, so look higher still. In my experience, it is unrealistic to look more than 10% higher than what you can really afford.  And it’s frustrating for both the buyer and the agent too. The buyer will keep wanting that out-of-range-house, and everyone will be wasting time.

Recent Los Gatos and Saratoga Sold Homes between 1.4 and 1.6 million:

As an example, late in 2007 I ran all the single family homes sold in Los Gatos and Saratoga with a list price of 1,400,000 to 1,600,000 since July 1st of that year (this would be a somewhat typical “move up home”). There were 39 such single family homes (in all school districts) that have closed over the 6 month period from mid-2007 to the end of the year which were listed in that price range.

The average list price was $1,522,660 and the average sales price was $1,544,810.  The home with the biggest drop in price was for $98,000 off. But there were several homes that sold by a margin higher than that amount! The biggest bid up was for $140,000 more than list! So 10% either way is about the top amount of “swing” in pricing you might see. Overall, the trend is to sell close to list price. This is usually true no matter what kind of market we are experiencing (some exceptions of course).

To summarize, then, the range in which a home might sell with its current list price seems bracketed by about 10% either way. Sellers, even if you are lucky enough to get multiple offers, do not expect your home to go higher than 10% over list price. Buyers, even with a long amount of time on the market, do not expect homes to sell more than 10% under list price – they might, on rare occassion, but this is a very small portion of the sales in which this happens.The market is always changing, so this may not be true to the penny in 6 months. But it is the current market situation. When buyers and sellers are both realistic about the market, it is far easier and less stressful to buy and sell homes.

 If you are contemplating selling one home and buying another in the same general area, it may be that you need more space – or it may be that you simply want a home that’s updated and you’re not sure you want to experience, first-hand, the joys of remodeling.

Not too long ago, I stumbled upon a website to help folks work through this question:  www.RemodelOrMove.com.

Have a look. I think it’s pretty unbiased information that can help with this angle of the “move up” question.

It can be a little nerve-wracking to sell one home and buy another. There are a couple of ways to structure this to avoid having to move twice and to store furniture (which is expensive as well as time consuming). The other alternative is to plan to store furniture and rent while taking your time in locating the new property. I’ll discuss each one and its pros and cons.

There are two main ways to do a sell/buy and move once. The first one is to sell the current home first and to purchase the next home with the proceeds of the sale of the first one.
 
(1A)  This can happen with a long close of escrow and buying the next home with a contingency “subject to the successful close of escrow” of the first home. It is sometimes possible to do a concurrant close, where both homes record the same day.  So if you are shopping for homes and have chosen one to bid on, once your home sells, you can make an offer on the one you like. Typically the home you’re selling will have a longer escrow – right now our typical escrows are 30 days, so you might structure yours to be 45 or 60 days.

(1B) Another very common way to arrange this is to do a shorter sale on the home you currently own and to have an option to rent back for a period of time. The rentback cannot exceed 60 days because the buyer’s lender won’t permit it. The reason for the restriction is that the lender wants to know it is really going to be owner occupied and not a rental. After 2 months, it’s looking too much like a rental for the lender’s comfort. Anyway, with this plan you can sell your home with a typical 30 day close of escrow, and then opt to rentback for 30-60 days (giving the new owner plenty of notice as to the exact day you will move out – they usually want 30 days). This way, you have the cash in hand to make the purchase and don’t have to write the offer with the extra contingency, which could make a seller nervous. Certainly if you’re in a market in which multiple offers are common, you would not want to write any extra contingencies, so this method might be preferable. Of course there are issues around rent-backs, so it’s not without some consideration.

(2) The other way in which you can move once depends on good equity in the home you currently own. If you have a lot of equity, you can take a Home Equity Line of Credit (called a HELOC) out on the first home, purchase the second home, move into the new home, and then sell the old home after you’re out of it.

The advantage of this is that you can stage the home to sell and not have to worry about being 200% clean and pristine at all times. For families with young kids, this is often the way to go.

The downside of this is that it IS expensive to carry two mortgages at once (so you need to price the home you’re selling very realistically so the period of holding both is extremely short) and you will need to do some work on the house to get it to sell for a great price. An empty house with barren walls etc. will not show great and will not attract your highest and best price. You can get a professional stager to warm it up with towels, flowers, art, etc. for about a thousand dollars. And you can rent furniture for a few rooms of the house for about $2500 for a couple of months. You may also need to paint, carpet etc. but these types of minor improvements usually pay back many times over. So, moving out first can be expensive (two mortgages, staging costs) but sometimes you will make more money if you are out of the house yourself and it’s staged like a model home. And it’s certainly less stressful. But don’t move out and leave it entirely empty. At a minimum, accessorize the kitchen and baths and place some items throughout the house to warm it up.

Selling one home and buying another and trying to do it all in one move is indeed stressful. Some folks would not do this – it’s just too frightening. Another option does exist:

(3) Rather just sell their current home and buy another all at once, some folks choose to store their furniture and stay in a short term rental (like a Marriott Residence Inn) for a month or two while they locate the next home. This can be a little more expensive than option # 1 above, but it’s less stressful.

In all cases, it is a very good idea to talk to a great lender upfront and to be pre-approved. That way, even if you plan to sell first and then buy, if the right home does happen to come available, you will be in a position to move on it. So keep your options open by talking to a lender and getting pre-approved.

I have had success helping people to do the two-house-juggle many, many times and I’m happy to report that not one of them has ever ended up homeless. In every case where someone sold and then needed to buy (with a long escrow or a rentback), we successfully located the replacement home in the time allotted and did the move on time. Sometimes there’s not much inventory so this can be a challenge. In the spring of 2006 I was in this situation so when my buyers could not see themselves in any of the homes on the active market, I searched out the expired listings and found one that looked promising. I got the paperwork signed by the owner of that home (a one-party showing agreement) and they agreed that if my clients liked the home, they would hire their own agent (I didn’t want dual agency, I just wanted to get my buyers into a home). My clients did like it, we wrote an offer that was accepted and it worked out fine for all.

Please feel free to call me if you want to discuss any of this. (This is not canned text on the website, but rather I wrote it myself based on my in-the-field experience.)

Best regards,

Mary

If you are planning to buy or sell a home in Los Gatos, Almaden Valley, Saratoga or anywhere in Silicon Valley, you may be wondering which inspections or reports you’ll need and how much money you’ll be spending on them.

First, let’s distinguish between an inspection and a report. An inspection is done on site. That is, it’s done at the property or home that you want to buy or sell. Often the written findings of those inspections are called inspection reports, but some non-inspection reports are done without going to the site at all. For our purposes in this post, we’ll refer to reports as information generated off site.

The main inspections for a single family home in Silicon Valley are these:

Home or Property Inspection
Pest or Termite Inspection

Additonally, sometimes these next two are ordered upfront, and sometimes they are ordered only if there’s a “red flag” or reason for concern in the property inspection:

Roof Inspection
Chimney Inspection

Assuming that these inspections are done for typical homes, not very large, remote or historic homes, the total cost of the four inspections should be less than $1000. Many inspectors have a fee chart that factors in the size and age of the home, and many inspectors will charge more if the property is far from where they work. Another element in the cost is when you pay. Most companies have smaller fee if they are paid the day of inspection and a larger one if you
bill it to escrow.

Typically, the home inspection runs anywhere from $300 to $500 for a typical home and the termite inspection costs approximately $150-$325.

Depending on the circumstances and the property’s components, you may also elect to have these inspections done:

Pool and Spa
Heater (and Air Conditioning)
Foundation
Electrical
Plumming
Sewer
Structural (and drainage)

If your property is in a rural area or in the Los Gatos mountains or the east San Jose foothills, you may also want to order these inspections:

Percolation (for septic tank)
Well water

The main inspections are often done by sellers before a buyer is ever on the horizon. Buyers who are comfortable knowing the property’s condition tend to write better offers. So it is a win-win for everyone.

Who needs to order the extra inspections? Usually your home or property inspector will suggest more inspections if he or she sees a problem with some component of the home. In foothill locations such as Gilroy, Morgan Hill, Evergreen, Silver Creek, Almaden, Los Gatos, Monte Sereno, Saratoga, Los Altos Hills, and parts of Cupertino, Los Altos, and Palo Alto, hillsides are very close to the home and water may be a problem. With hilly areas, there can be drainage and foundation issues from the runoff. Our clay soils expand and contract with the amount of moisture being held and our concrete foundations are not nearly as strong as the expansive soils. In those situations, where foundations and drainage are a concern, you may want to pay for a structural inspection. Such an inspection can easily run $600 to $800, but the problems being addressed are likewise potentially expensive to correct.

Typical reports for Silicon Valley home sales include the Natural Hazart Report and Environmental Report, which together cost anywhere from about $85 to $140, depending on the provider and any extra information included (maps, the CLUE Report, the tax report, etc.)

For condo owners and buyers, usually just the home and pest inspection will suffice. But what about the massive homeowner documents? The thick pile of information can be very difficult for anyone to understand. One of the most crucial elements is the “reserve fund”. There are two sources for having the reserve funds analyzed locally. One of these sources also analyzes the completeness of the HOA packet and will note any red flags. Unfortunately the latter source has no “errors and omissions” insurance.

Each parcel and situation is unique. Please contact me for assistance with your own situation.

A real estate agent is someone who’s taken a course (or more) and passed a state exam and is licensed by the state to sell real estate.

A Realtor (pronounced REEL-TOR, not real-a-tor) is an agent who’s ALSO a member of the National Association of Realtors, which is a voluntary trade group. Realtors promise to abide by and take very seriously their Code of Ethics. Ever wonder what is in it? It’s not short and is quite comprehensive. Take a look:

http://www.realtor.org/mempolweb.nsf/pages/code

Please understand that not everything that is legal is also ethical – Realtors have a higher standard of practice. Often non-Realtors (at least in Siliocon Valley) are not full-time agents but dabble in real estate. Realtors are usually full-time and work as professionals.

Finally, if you have a problem with an agent who’s not a Realtor, you have to complain to the state. With a member of NAR, who is almost always also a member of the state association (CAR – the California Association of Realtors) and local (either SILVAR – the Silicon Valley Association of Realtors or SCCAOR – the Santa Clara County Association of Realtors), you can take action locally for most any issue and do not need to go all the way to the state level. Agents work hard to remain in good standing with the local, state, and national boards.

In the San Jose area, most of the large realty firms are “all Realtor” offices. Usually becoming a member of NAR, CAR and either SILVAR or SCCAOR is a requirement for joining the company. In other areas and in other states, in can be different. So it’s mostly the independents where you’ll find a real estate licensee who’s not also a Realtor. But ask!

When you interview an agent, then, the first question to ask is this: are you a Realtor?