Right now I’m working with a number of very frustrated home buyers.  Silicon Valley real estate inventory is painfully low, and in the lower price ranges especially, that means multiple offers are fairly common.  FHA home buyers, in particular, are getting out bid and out negotiated by all cash buyers, many of whom are investors.

How low is the inventory?  Let’s have a look at January’s inventory for houses & duet homes (“class 1″ or single family homes) over the last ten years in Santa Clara County (San Jose, Los Gatos, Campbell, etc.):

2012  1,382
2011  2,007
2010  2,426
2009  4,759
2008  4,872
2007  2,698
2006  2,202
2005  1,285
2004  1,612
2003  3,119

The average January inventory of available houses over the last 10 years is 2,636.  At 1,382, January 2012′s available inventory of houses for sale in the San Jose area was just 52% of normal.  It’s not really much different now, in early February (just did a quick check on the MLS and it’s  1509 houses now – 630 have sold & closed in the last 30 days so that’s 2.4 months of inventory – a hot seller’s market).  This is what constitutes a very severe inventory shortage.

Demand hasn’t slackened, but supply has.  You know what that means – it will push prices up, it will make buyers crazy feeling.

Why is inventory so low?

A common question is this: why is inventory so low?  I believe that there are a few drivers.  First, many home owners who would like to move really need more equity to do so.  They are waiting for the market to recover.  Some may be waiting for prices to return to their previous highs (they could be waiting awhile). Others just need a little more to make the move possible at all.

Many owners of higher priced homes are holding on until the second half of 2012, when it is expected that there will be more people with buying power due to recent and upcoming IPOs.  Economists are now predicting a bit of a frenzy the second half of this year with prices in more expensive homes getting pushed up due to competition from employees of various high tech firms.  Smart buyers are trying to get in before that hits – a real challenge given the inventory situation.

Reality check: not every house is selling!

The best properties are selling well – those which are newer or nicely remodeled, in turn key condition, easy to see, great marketing with multiple photos, appropriate MLS exposure and priced aggressively.  This is what every buyer wants, the perfect house.  Most of my clients tell me that they are willing to replace carpet and repaint, but they don’t want to do anything big, such as kitchen or bathroom remodels, removing a pool, foundation or drainage repairs, etc.  No one does!

One of the easiest ways of improving your odds on being able to purchase a house is to move away from the new or fully remodeled vision of your ideal house.  Lower your budget a little, decide to prefer homes that have been sitting on the market not due to location issues, but rather to pricing or condition issues – both of which can be fixed.

For instance, many home buyers will take a pass on properties which have a pool in the backyard.  A few months back, I did some research and found that houses with pools are harder to sell right now.  Appraisers count a pool as an improvement, but many consumers view it as a liability – an ongoing monthly expense to heat and maintain and a risk if there are small children.  Many think that it will be overwhelmingly difficult to remove and relandscape a pool, so will not even consider writing an offer if the property includes an in ground pool.

Truth is, it’s not that hard to hire a company to redo a backyard; it is not invasive the way a kitchen remodel is.  You could have it done before even moving in!  The cost varies on whether you want the pool fully removed or partially as well as how to relandscape afterwards.  I have seen bids for pool demolition work under $10,000 (relandscaping extra) with more bids between $10,000 and $25,000.  Lawn and sprinklers are not so expensive to add!

The pool issue is just one example – there are many other properties for sale which are passed over due to the condition not being ideal.  Remodeling can feel a little scary but when inventory is so tight, it can be the ticket to home ownership.

Likewise with over priced properties.  Although most homes sell within a couple of percent of list price, there are exceptions.  Sometimes real estate is badly overpriced, and in those cases you may get a seller to agree to a larger price reduction – 10% may even fly.  (This is unusual, I would note. Usually if a house is not worth within 5% of list price, the seller is unreasonable and won’t accept an offer which is less. But sometimes it can work.)

Here’s to the over priced ugly duckling.  It could be your best friend when inventory is rock bottom!

What is a “cool air return“?  Silicon Valley home hunters are very likely to encounter both heating vents (also called heat registers) and cool air returns in houses, townhouses and condos across the South Bay Area.  They are found wherever a home enjoys central forced air heat with ducts and vents.  (Some Victorian houses have forced air heat but it is only brought to perhaps one main room or area in the house!)

The purpose of a cool air return is to feed the furnace with a supply of cooler air to be heated ad then circulated back into the rest of the dwelling via the heat registers or vents.  Often the cool air return is found near the floor.  This makes sense when you consider that the hottest air will rise, leaving cooler air nearer the ground. Heat registers are often near the floor (and near a window), but if the home is on a slab foundation and has forced air heat, the vent will be on the ceiling.

How can I tell the difference between the cool air return and a heat register or vent?

Generally speaking, the vents for warm air are long and narrow, and the cool air return is much larger and boxier in shape.  Below please find an image of heating vents.

The first example of a heating vent is probably the most typical you’ll find in Silicon Valley: it’s metal, kind of a dark gray color.  Older ones (homes from the 50s) have an even narrower shape but still tend to be metal, sometimes painted dark brown.

The next example is usually found where the property has hardwood floors.  The idea is to make the vent blend in and be less noticeable. Naturally, the wooden vents come in a variety of colors to match the many types of woods that might be found in a residence.

By and large, cool air returns and heat registers are pretty ugly. The wooden vents are a nice step above the usual offerings.  Several companies sell nicer cool air returns and heat registers or vents, though. So if you are remodeling and want to get away from that “tract housing feel”, a few custom touches might be just the ticket for a more unique feeling home.

What else can be done, besides changing the material from metal to wood, to improve the look of my home?

An entire industry seems to be rising out of the desire for more attractive finishing touches in homes, offices and public spaces.  With a little searching, you’ll find that in addition to the basic vent style shown above, there are other types too.  For instance, ornate brass  (or other finishes), may be found in Victorian homes which do have heat in every room. Restoration Hardware advertises several of these, some of which would look great with a Craftsman style home or other distinctive architectural styles. (Click on the link to see their offerings and images of these vents.)

A quick search on Google images will reveal that there are lots of choices out there!  I’ve seen just about every type imaginable.  One website, called BuyAirVents.com, has a nice selection of cool air return covers as well as warm air register covers.  Another site, Beaux-Artes, features exquisite grille work which looks fabulous in a variety of settings – check out the return air page!  My own home is Spanish style – so now I’m on a quest to find vents that will match the look of our house too.

When house-hunting in Silicon Valley, it’s good to take note of how clear the windows are.  Sometimes when a dual pane window appears wet or foggy, it’s not just a matter of the sprinklers hitting it, but instead could be a failure of the vacuum seal. If that’s the case, the window may no longer be as energy efficient and certainly will not be as attractive as intended.

There are some window repair professionals who claim that they can de-fog windows with condensation (the common belief is that foggy windows must always be replaced).  What many consumers do not know when purchasing dual pane windows is that many of them will fail, unlike the single pane windows they are replacing. (The Old House Authority site says 30% of the time, a replacement window will be replaced within 10 years. It also advises that “More heat is typically lost though your roof and un-insulated walls than through your windows. Adding just 3 and 1/2 inches of insulation in your attic can save more energy than replacing your windows.”)

Seal failure of dual pane window

Many of my home buyer clients for Los Gatos, Almaden, Cambrian and San Jose insist upon having dual pane windows in their future house or townhouse.  Before assuming that any brand is OK, though, do some research to learn about the windows’ failure rate and how long the warranty on them will be.  Dual pane windows look great and do save a little energy, but if you have to replace one third of them within ten years, it won’t be a bargain at all.

In the middle of the last century, the Santa Clara Valley was bursting with vineyards, fruit and nut orchards, and groves of citrus trees. The mild climate and all of these beautiful blossoms mile after mile warranted the nickname, “The Valley of Hearts Delight“. Most of it was, of course, unpaved.  Following the end of World War II, the agricultural land began giving way to housing and industry, later more housing and high tech in particular, and Silicon Valley was born. And, to quote a song, “they paved paradise”.

Water can be somewhat scarce here at times – the sub tropical climate means mild temps and just enough rain, about 20″ per year for most of the San Jose area, but more as you get closer to the Monterey Bay and Pacific Ocean.  When we do get rain, where does it go? In the days of big agriculture, most of it found its way back into the drinking water: it was absorbed by the soil, and then it filtered down into the underground streams.  Wells tapped into this water source and the water was used for drinking, cooking, bathing, watering the crops and more.  Now, though, much of the valley is paved.  Water runs to gutters, and they lead directly to the bay, skipping the aquifers and also skipping the filtering process that the soil provides.  As you might imagine, this can screw things up a bit.

One solution is to create more places for the runoff water to get back into the soil and meander back to the aquifer.  The City of Cupertino has vegetated swales for just that purpose behind the library and city buildings, and a large sign explains why the landscaping looks the way it does (a dirt strip with a sunken section in the middle, but landscaped).  This is not uncommon in many parts of the US – I have seen it all over the east coast and the southern states – but a little less common here.  A great idea, I hope it catches and becomes more typical. Kudos to Cupertino for working to improve the local ecosystem and water quality! We need to do more for water reclamation. If it gets all the way to the bay, it cannot be drunk any more, but from the aquifer it can. So many reasons why we should be diverting water away from pavement and gutters and onto soil!

After taking note of this a week or two ago, I did some searching online and found a 2006 article by the Cupertino Courier (now owned by the San Jose Mercury News) about this same effort. It’s a well written piece and if you want to learn more, read on over at the archive:
http://mytown.mercurynews.com/archives/cupertinocourier/20060201/cu-news1.shtml

If a house or other building is going to be fumigated or tented for termites (or other pests), certain things must be done for the tent to go on and to effectively seal the structure.  We call that “fume prep” work or “fumigation prep” work. It is sometimes included in the cost of the fumigation, and sometimes not – so if this work is being done at your property, be sure to ask if it’s part of the bid!  If it’s not included, there are companies that can be hired to do these jobs if you do not want to or cannot do them yourself. (If you need one in Silicon Valley, please email me and I can give you a name or two.)

Anything which obstructs being able to enclose the home or building must be cut back, disconnected or removed.  For instance:

• fences or gates which touch the building must have a few slats or sections removed so the tent can be placed next to the house
• bushes, hedges, trees and other plants which are adjacent to the house must be trimmed back or pulled away as much as possible – at least 12″ from the structure (if trees are touching it, they must be trimmed)
• any other structure such as a trellis or deck must either be included with the fumigation or separated from the house so that a tent can go between it and the house
• downspouts connected to French drains must be disconnected at the ground
• loose gravel, tanbark or mulch needs to be raked back or removed at least 12″
• any stored items up against the building must be removed

Other items which make it hard for the fumigation to happen need to be removed, such as an aerial or antenna on the roof or an awning on the side of the home., a chimney cap, or weather vane.  Solar panels must be drained.

When everything else is done, it’s important to soak the soil around the building (the perimeter) so that it’s really wet going down about 4″ and out from the house or other building about 12″.  The damp soil helps to create a seal so that the fume is effective.

Please note, this list may not include everything required for your specific building!  Your fumigation contractor should provide you a comprehensive list both of what is needed for the fume prep and also what is needed inside the home (food removal, for instance), by way of utilities, accessibility & keys etc..  There’s a lot of paperwork that you will be asked to sign when you hire a fumigator, but don’t just skim and sign: read and make sure you understand everything so that there are no surprises!

Related reading:

Choosing a home inspector in Silicon Valley

How often should you get a termite inspection?

Choosing a termite company (on my Live in Los Gatos blog)

Keeping up with the latest trends in home decor and remodeling is a bit like painting the Golden Gate Bridge: by the time you’re done, you need to do it all over again.  Styles change, tastes change.  How often do you really want to remodel and update your hardware, light fixtures, floor coverings – to say nothing of kitchens and bathrooms?  If these items are functional and you like them, there’s no reason to change.  Then again, if you’re going to sell your home and want to maximize the return, it might be worth it to do some updating.

The average American kitchen is remodeled about every 17 years (sorry, I don’t recall where I read that) – that’s long enough to jump from one trend to the next, one set of materials or colors to the next.  If you wait long enough, certain themes actually come “full circle”, not unlike clothes!

To make a point:  in the mid 70s, brushed brass was in, and many if not most homes built then in the San Jose, Silicon Valley area were made with brushed brass doorknobs, hinges, drawer pulls, doorbells, you name it.  That trend moved to gold, brushed stainless steel and now – full circle – back to brass! Ditto that with colors.  “Earth tones” were all the rage in the 70s (olive green, deep brown, tan) and as things moved through the cycles (with a whole lot of white in between), the earth tones have come back again.

Some colors make more infrequent appearances, such as lemon yellow, lime green, bubble gum pink, baby blue….

Let’s just take a look at bathrooms and kitchens for this discussion about colors, materials and being in style.

If you’ve got a beautifully preserved 1920′s style bathroom with lovely tile, it’s practically an antique. (Apparently antiques are 100+ years old at a minimum.)  A few years ago I sold a Spanish style home in the Japantown area of San Jose with a drop dead gorgeous, original tile bathroom – you can see the photos and info online via the link.  This isn’t just old, it’s special!

Wood and tile were the best of the first half or so of the 1900s.  Early 1900s kitchens included wooden counters that boasted ridges and grading down toward the sink – a greatly practical idea to get the water or anything wet out of the way.  Some bathrooms with lesser quality had wall hung sinks rather than sinks with vanities, and they had a monochromatic tile scheme (just one color) with no fancy trim tiles.  The image of the bathroom sink and vanity, above, was very typically found in Santa Clara County homes in the 60s (or earlier) – very frequently there was a 2 or 3 color scheme and the trim tiles might have indents or ridges.  In the photo above, most tiles are green but there are pink accent tiles on both the counter top and floor, the sink is pink but the corner tiles are all black (similar to the older Spanish style bathroom I linked to above).

In the  70s earth tones reigned. Bathrooms and kitchens might have larger white tiles or tan tiles with black or dark brown grout.  Stall showers might be gold, tan, light brown – all with dark brown grout.  (Kitchen appliances were “harvest gold”, “avocado green” etc.)

In the 80s things began to lighten up.  The harvest colors receded and the golds and greens became a thing of the past.  Sinks, toilets, and appliances largely went to light colors (mostly white) or to a stark black.  Counter tops were more likely to be white tile with white grout or a light colored, swirly plastic or cultured marble surface.

By the 90s, tile was no longer the preferred material: slab granite, granite tile and Corian or other solid-surface materials were the best.  Slowly, white was getting some accent colors again but the “light and bright” tone remained the mainstay. Black appliances were in (and they were blacker than ever).

A decade later, at the turn of the century,  it was maple cabinets, slab granite (or other natural stone, or even concrete) and black appliances were giving way to brushed stainless.  Bathrooms enjoyed more recessed lighting, and where fluorescent lights were required, they were showing up in strange places, such as under the cabinet (by your feet) – to keep the incandescent lights above. Some Italian style, metal cabinets and counters also became increasingly popular too.  Light colored bamboo wood flooring (soft wood, not a hard wood), were highly prized.

Today, engineered stone counter tops, which are easier to maintain and come in a wide variety of colors, are perhaps the most popular choice for bathroom and kitchen counters. Dark cherry cabinets and dark, Brazilian wood floors are popular.

All of this to say:  whatever you do today, expect it to be outdated tomorrow (within 10 years).  Unless you are doing improvements to sell, I suggest making changes that you will like.  After all, first and foremost, your house or condo or townhouse is your home.  It’s not a showpiece, a gallery, a piece of jewelry.  The popular ideas will change over the next 10 years. You can also choose colors and materials which are traditional and have enduring value with a wide appeal.  If these are within the realm of what you personally like, it may be the best bet of all.

 For more reading:

Home sellers: beware over improving your property when preparing to sell

Selling Your Silicon Valley Home: Staging & Color

Want to Sell Your Home? Make it Easy for Buyers to See It!

When I show homes in and around San Jose, often I will see things that my buyers don’t recognize and I will take that as an opportunity to educate them on some of the components of a house, townhouse or condo.  (The strangest question along these lines I ever got was when a Silicon Valley first time home buyer had never noticed or recognized antennae on houses before and wondered what they were!)

A whole house fan is a more affordable way to cool down a residence. How does it work?  In the evening, when the outside air temperature is lower than the indoors temps, windows are opened and the whole house fan is turned on for about 15 minutes.  The fan sucks all of the hot air out of the house and discharges it outside.  Since the windows, and maybe doors, are open, this vacuum sucks in the cooler night air.

This is a lot cheaper than air conditioning to install and also to run. According to one whole house fan installation website “installing a Whole House Fan is approximately 25% the cost of installing an air conditioning system and approximately 10% the cost to run.”

Alternatively, of course, if you do not want to have A/C, or if you don’t want to run the air conditioning every time it’s a little too warm, you can pull out fans for the windows and doors in your home and run them in the evenings to pull in the cooler night air.  But the whole house fan is easy and convenient – you simply turn a switch on and off – and is considered a very nice home improvement.

Whole house fans have been gaining in popularity across all types of markets, even among luxury homes, since they are more energy efficient and eco-friendly than air conditioning.  The only thing you might not know that’s important to understand upfront is that when it’s running, the noise is very loud.  Luckily it only goes for a few minutes – a perfect opportunity to step out onto your back porch and enjoy the cool evening air while it runs.

When you purchase a house on a corner lot, you may not realize that most likely there will be additional requirements of you regarding your landscaping compared to other properties which are not on the corner.  This is because corner lots need to provide a “line of sight” so drivers of cars can see what’s ahead should they round the corner.

In most parts of Silicon Valley (San Jose, Los Gatos and elsewhere), in the setback area of a corner lot you will not be allowed to have fences or landscaping that are more than 3′ tall – with the possible exception of a tree in which the branches really only fan out at a height of 7-8′ or more.

For properties which are not on a corner, drivers don’t really need to see through the property to get visibility on the road ahead, so the landscaping rules are much less restrictive.

These rules are not often or uniformly enforced from what I can tell, but you never know when a code compliance officer might show up with the requirement that you thin out or remove some landscaping or fencework, so keep that in mind if you buy a house on a corner lot that is heavily landscaped too close to the street.  Also, check with your own municipality (Campbell, Santa Clara, the county if not in an incorporated area, etc.) to see the residential real estate codes which apply in your specific property’s case.

I’m going to ask you something personal…regarding your bathroom habits.  Is your toilet low flow?

If your house was built before 1994, soon your toilets will need to be “low flow”.  So too will your shower heads and faucets.

In 2010, a bill was passed in California (SB 407 Padilla) requiring all homes (all residential properties) built prior to 1994 be retrofitted with low flow devices when remodeled as of 2014.  If not remodeled, the change still must take place by 2017 for all residences built prior to 1994.

So if you are updating your kitchen, wet bar, or bathroom any time soon, remember: low flow’s the way to go!

For those selling, it should not come as a surprise that this will mean another disclosure to make (whether or not the retrofitting has been done).

About a year and a half ago, I wrote an article for Silicon Valley home sellers about preparing the house or condo for sale: Preparing Your Silicon Valley Home to Sell and Return on Investment.  In that piece, my hope was to convey to sellers that strategic improvements to their real estate prior to sale will result in a good return on investment.  Too often, sellers don’t want to do enough prep work so that they can maximize their sale price.

Sometimes, though, I meet property owners with a bent toward the other extreme.  They decide to do a whole ton of renovating (almost as if it were a house which they are flipping or one they want to be like brand new) in order to get more money from the sale of the house.   What they plan to do may be overspending or over improving.  It may be going too far such that the return on investment is actually lessened rather than improved.

Most of the time, your best investment will be in doing small, strategic repairs, renovating or improving.  You get a good return – even great – on things like paint, floor coverings and touching up the front landscaping.  Often even fresh sod can bring a good return because an attractive front yard will get home buyers to look inside, whereas really poor curb appeal may cause them to turn away. Counter tops, light fixtures, and maybe new interior doors can wow a buyer and give you a good bang for your buck.  Totally remodeling a kitchen (with new cabinets) or bathrooms may recoup you less than what you’re putting into it. Hire a great Realtor and then work with her or him to determine which improvements will net you the most.

Think of the pre sale home improvement like this: it’s lipstick and rouge, not cosmetic surgery.  Go too far and you not only won’t net the most from the sale, but you could actually lose money too.  “Balance in all things” applies to preparing your home to sell too.  Not too little, not too much.

In case you haven’t heard, The Carbon Monoxide Poisoning Prevention Act of 2010 (Cal. Health & Safety Code §§ 13260 et seq.) is now law.  As of July 1, 2011, California homes need to have a carbon monoxide detector installed.  This is not a “point of sale” ordinance just for people selling their homes, but instead is for all houses, condominiums, townhouses etc.  (whether occupied by owners or tenants).  For apartment buildings the deadline is later, January 1, 2013.

These detectors look a lot like smoke detectors and can be run on either batteries or plugged into the wall, depending on which model you purchase.  Experts suggest that you place the detector in the sleeping area of the home and on every floor of it (including basement, if your dwelling has one).

To learn more, I suggest doing research online, and be sure to include the Consumer Reports information on carbon monoxide detectors too.  The Cal Fire news release regarding the requirement can be viewed online also.

If you have just bought your first Silicon Valley home, you may feel very relieved to have survived the contracts, negotiations, the disclosures, the appraisal and the escrow and made it all the way to closing.  You are a successful home buyer!  You move in, unpack and then…. what? What do you do?

I have a few suggestions.

First, while it’s fresh in your memory, pull out the disclosures and inspection reports and (if you haven’t done this already) make a list of the items you must do and want to do.  I suggest you include at least 3 categories:

1. Health & safety items
2. Protecting the house from damage
3. Lower level items with aesthetic value (decorating and in some cases remodeling)
4. Ongoing projects you want to remember to do periodically around the house and yard such as changing the smoke detector batteries, cleaning out the rain gutters, doing a “walk around the house” to check for any issues with vent screens, roof tiles etc. (If you have bought a condo or townhouse, this is still important.)

It is too easy to focus on updating to dual pane windows (gratifying since they look nice) and ignoring foundation cracks, electrical problems and termites, so making this type of list will help you to keep on track with the better priorities (1 and 2 as opposed to 3).

Second, pull together all of the expenses you laid out in purchasing your home. Create a file with a spreadsheet of your costs and the receipts that go with it (include a copy of your HUD 1).   This will be helpful in establishing your tax basis and may protect you when you eventually sell the house from paying more taxes than you’re legally required to do.  Go over it with your CPA or Enrolled Agent or Tax Professional as some of them may be deductible on your taxes this year and some may not qualify as related to your tax basis.

Third, if you haven’t already worked up a reasonable household budget, do it now and plan in both a reserve account and a plan on what repairs and improvements to do and in what order.  The reserve account is important because some expenses can come unexpectedly (fences blow down, water heaters die, water or sewer pipes can burst without warning).

Fourth, make sure that your insurance is up to date.  I advise making a list of major items in the house – a walk through with a video camera is a good idea too.  When you complete major projects, update the list.  Keep one paper copy somewhere safe and another copy either “in the cloud” or with a trusted friend or relative, ideally outside of Santa Clara County in case the reason for the need is an area wide problem.  Should your house ever burn down, you would need proof of your possessions for insurance purposes.

Lastly, now that you have a major asset (your house or home), you might consider creating a will & trust with the help of a good attorney.

Some Silicon Valley homeowners spruce up their yards and gardens in spring and summer with tanbark or mulch. While this is a very common practice, it can be a bad idea if too close to the home’s foundation. Tanbark is simply small bits of wood, and mulch is often no more than shredded wood (sometimes it’s peat moss). Why is that bad?  Wood is the food for termites and piles of tanbark or mulch can hide them as well!

If you have tanbark or wood mulch close to your house now, it’s suggested that you scrape it back away from the house a foot or so. (Check for the mud tubes when you do so.) Otherwise you are inviting subterranean termites to have a feast!

Ask your landscape expert what you might use in lieu of these products in your garden.  Perhaps a peat moss or mushroom mulch, pavers, clean compost topsoil or river rocks can clean up the area closest to your house in stead.

Did you buy your house at the peak of the market?

Recently I met with some of my past clients, who purchased their San Jose house close to the height of the market (2005-2007).  In those days it was a hot seller’s market (not unlike many parts of the Silicon Valley real estate landscape today, actually), and buyers routinely purchased their homes “As Is“, meaning no repairs provided by the sellers.  Desperate to get in when prices were appreciating fast, it seemed that most home buyers said “we’ll take care of it after we own it“.

But they forgot.

Actually this didn’t just happen during the peak of the market here in Santa Clara County – there’s always a percentage of consumers who buy As Is to get a better price.  They have good intentions about taking care of the mold, the termites, the roof and whatever else might not be either in good working order or free of infestation.  But once they move in, the “to do list” doesn’t seem to have those items as a high priority, and over time they completely fall through the cracks.

Pull out your old file, find your inspection reports and review them, especially if you are preparing to sell your home

Today I want to encourage you to dig out your old home inspection and pest reports, dust them off, and have a look.  Did you need to address a problem with termites, electrical issues, leaks?  Is there something to take care of with the roof, gutters, dry rot or fungus?  All of those things do not self-correct, but instead grow worse over time. 

If your reports are more than three or five years old, you might consider getting new ones done since in all likelihood there’s more work, possibly in new areas, now. Just make sure you hire a reputable company which won’t gloss over problems, leaving them latent and waiting to cost you more in the end.  Don’t toss your old inspections out – have a look and see if everything that used to be called out is covered.  If you are planning to stay put, is best to correct everything so that your home is kept in good condition for the long haul. If you are planning to sell your home, it’s important to fix it up first if you want to get the most for your sale.  The market is very different from the peak, and having the home improvement work done is more important than ever now.

Are you buying a distressed property (short sale, bank owned, or pre-foreclosure) in Silicon Valley?

If you are purchasing a short sale, pre-foreclosure or bank owned home – let alone one at auction – please be aware that these properties are most often neglected and have more than a normal share of deferred maintenance.

You or your Realtor can look up the sales history for the home.  If it was purchased between 2005 and 2008, there’s a good chance that it was sold As Is and that if any repairs were needed, they weren’t done.

With pre-foreclosures or short sales, sometimes the sellers are well organized and will still have their old reports.  The agent may not be aware that these are available, but they can provide at least some information since pre-sale inspections are usually not provided with distressed sales.

For more reading on this topic:

How often should you get a termite inspection?

Would you recognize signs of subterranean termites if you saw them?

Watch for Dampwood Termites in Silicon Valley!

Do pools enhance property value in Silicon Valley back yards?  Do they make homes easier or more difficult to sell in Santa Clara County? What’s the impact on resale value?  The common wisdom is that it depends on the amount of yard or lot size, the price point and the location of the residence. When a pool takes up the majority (or virtually all) of the back yard, most often it makes the property undesirable to buyers – at least to most home buyers – and that, in turn, causes the sales price to slip a bit. It used to be that pools were almost a given on more expensive residential real estate, particularly if there is a lot of land.  Today I ran the numbers, though, and it appears that things have changed.  Below please find the “months of inventory” for homes with and without pools and note that it is very consistent, in the fields I checked, that it’s now harder to sell a home with a pool than without

.

Pools appear to make it harder to sell a home in Santa Clara County right now.

Truthfully, this came as a bit of a surprise to me since many of the luxury properties in Almaden, Los Gatos, Saratoga, Monte Sereno and nearby areas do include pools, especially if they’re on a half acre lot or more.  In the past, I remember high-end buyers not wanting to purchase a larger, estate home if there wasn’t already a pool in place since it’s such a mess (and noisy, and expensive) to go through the construction of one. Lately, though, my high-end buyers (properties upwards of a million dollars) are fairly adamant that they do not want a swimming pool. Many of them don’t want the upkeep costs or chores and have told me that they would not use it enough to make it worthwhile.

What about luxury home buyers and pools in Silicon Valley?

I wanted to see if it changed when the data was viewed in light of pricing and not just acreage or lot size, so to finish up this study, I looked at regular sales of houses listed at over $2,000,000 in Santa Clara County (the San Jose area) – these are considered luxury homes here.  For houses without pools, the months of inventory was 5.4 (not terrible, still less than the 6 months which NAR calls a balanced market) but for homes with pools, it was up to 6.8 months of inventory. That’s a significant difference and is in line with what we saw when the question was put with the amount of land involved.  Generally speaking, buyers would prefer to not have a pool, even in the higher priced subsets of the market.  (My advice: run the numbers for your own home’s micro market and see. It’s possible that this may not apply in your case.)

This still didn’t sit quite right with me since I’ve known the most expensive homes to all have pools, so I spent some time looking at homes in Los Gatos, Monte Sereno and Saratoga. I was interested to know if homes with pools were still harder to sell and had a lower resale value, as appears to be the case in more normally price houses.

First I looked again at larger lots – half an acre to about an acre and a half – in all three areas combined.  It was inconclusive but basically there were 102 of them for sale now and 12 which have closed in the last month (so 8.5 months of inventory).  Of those on the market, 56 had pools and 46 didn’t. This was too broad given the variety of zip codes and school districts, so I narrowed it to just Saratoga with only Saratoga schools.  For those in this area, just 3 have sold and closed in the last month with no pool (averaging about $1,850,000) but 9 have closed with a swimming pool (averageing about $2,735,000).  The average square footage of a house without a pool was 3482, but the average house size of places with a pool was 4309. It does appear that homes with pools do sell for more, but also that in general, these are larger homes.  Since 3/4 of those sold in this segment of the Saratoga market do have pools, it would be hard to say that buyers are rejecting homes with pools.  Of course, a 4300 SF house in Saratoga with Saratoga Schools is much different than a house in Willow Glen with San Jose schools – just underlines the fact that the real estate market is comprised of many micro markets.  What is true for the county as a whole may not be the case for luxury properties in Los Altos, Saratoga, or Almaden Valley.

Why do pools hurt the odds of selling for most houses in the San Jose area?

Bigger studies would need to be done to thoroughly address the question of why swimming pools appear to hurt saleability for most residential real estate (the very high end excluded).  But I will venture a couple of guesses.  First, there are weather issues.  Last summer was cool and this winter doesn’t seem to want to end. Pools are probably a lot more appealing when there’s significant doses of hot weather.  Second, we are still recovering from a very tough recession, so the new frugality which is currently fashionable and which has become a way of life for so many of us may be impacting the perceived value of in ground pools, too.  This may change as we move more into the recovery and when our unemployment isn’t just over 10%.

Selling a home with a swimming pool

Home owners, it’s important to realize that although you may have enjoyed and treasured your pool, for buyers it may be viewed as a liability – an expense to have it removed or to maintained. To get the best deal for your home, you’ll want to try to mitigate the buyer’s concerns since worried buyers will pay less and confident buyers will pay more for your property. Solar panels make it less expensive to maintain, and therefore more acceptable to consumers worried about power bills.  Families with small children may be concerned about safety issues, so having a great child-proof fencing system may provide them peace of mind.  You could, as a negotiation strategy or selling bonus, throw in one year of pool service from your favorite provider too, since they may feel ill-equipped to take on the maintenance of a pool as soon as they move in.  A home warranty with pool coverage will also provide peace of mind and a sense of a safety net should things go wrong.

Selling a house with a pool? Make sure it's clean!

Pools, like every other element of the house and yard, need to be in pristine, sparkling condition if you want to maximize the sales price of your property.   When home buyers, especially first time home buyers, see missing tiles, obvious rust stains, rampant algae, leaking pool equipment or other problems, they see both work to be done and dollar signs.  This is even more true if there are no pre-sale inspections.  Don’t provide reasons for your home’s buyer to be worried – buying a home at all is worrisome enough!

Should you remove the pool before putting your house on the market?

Filled pool: what not to do

Some home sellers may opt to get rid of the pool before selling. That can be a good idea, especially if the back yard is really small, but it needs to be done correctly. Recently I was house-hunting with some clients in the Almaden Valley area of San Jose and we saw a backyard where the pool was left completely in place, but filled with dirt and planted with grass. I assure you, that was a terrible idea because now buyers see it as twice as much trouble (and cost) to rectify. Home buyers, if you are neutral on buying with or without a pool, you may find it far easier to purchase property that has a pool as it seems that there will be less competition for it. If you want a pool, you are in luck right now!  Market conditions change and three or four years from now, when we are in a more recovered economic status, pools may again be the hot ticket.  This is a great opportunity to buy a house with a pool while there’s less competition! Want to talk about buying or selling a home with a pool?  Call or email me today!