Instead of writing about the news, today I am in the news, so contrary to my normal practice, I’m the focus of this post!

Today’s San Jose Mercury News has a pull out section, styled like a magazine, with its annual “best of” list – the “Best of Silicon Valley in 2011“.  I was deeply honored to find myself listed as the “Best real estate agent in Silicon Valley” (if you have the print edition, it’s at the top of page 33). The online edition isn’t yet published.

The results of the list come from voting by consumers.  I believe that my clients are the best on the planet (you may have noticed that on all of my sites and blogs, somewhere is the line “helping nice folks to buy and sell homes in Silicon Valley“) and their endorsement is usually apparent with their repeat business and referrals, but this is a wonderful acknowledgment that I deeply appreciate.

For those finding this who do not know me but who are searching for a good, knowledgeable, communicative and ethical Silicon Valley Realtor, I invite you to read about my background and see some comments by clients on my websites.

Info on Mary Pope-Handy on the popehandy.com website (testimonials here, gallery of sold homes here)

Info on Mary Pope-Handy on the Valley of Hearts Delight site (pull down menu for various aspects)

Many thanks to all who voted for me!

Are open houses important for getting a home to sell, or for getting it to sell at a higher price?

In Silicon Valley, only a small percentage of homes sell directly from an open house visit by a home buyer. Depending on whose statistics you believe, it’s somewhere in the 5% to 10% range. Some would argue for smaller figures than those.

The best home buyers, who are pre-approved and serious enough to be working with a real estate professional and have their own buyer’s agent, can come whenever it suits both their schedules and the home sellers. But that doesn’t mean that all of them do.  Some serious house hunting buyers may be out on their own, without their agent because they don’t want to “bother” him or her too much. I’ve had clients like that myself, and no matter how much I reassure them that I want to show them homes and prefer it, even, they want to mostly look on their own until they are either more serious or have found something they really love.  It is not uncommon for buyers to phone or email me that they’ve seen a house that they want to buy.  This seems to be a growing trend.

Knowing that the best Silicon Valley home buyers do have an agent, don’t necessarily need open houses, there are some who move from this thought to the idea that open houses are without significant value to the home sellers.  Some Realtors would assert that open houses only get neighbors and “Lookie Lous”, that they are only used by the agent to get new buyers and are a waste of everyone’s time. That’s an extreme position and I think it’s mistaken. (more…)

Often times, if a relationship sours between a consumer and a real estate agent in Silicon Valley, it’s not because of an intentional deceit on the part of the licensee, but rather an oversight, a blunder, or a mistake.

Sometimes, though, there are things done by the real estate licensee which are more calculated and truly are not in the buyer’s or seller’s best interest. (This runs both ways, of course – sometimes consumers pull bad stuff on Realtors, too.)  Those are the things we’ll discuss today. Sometimes the consumer never realizes that these occurances were more than unhelpful. Other times, the buyer or seller catches on – but by then, it’s too late.

First, a short list of a few real estate tricks and traps that buyers should recognize as red flags. We’ll look at each of these in detail below the list.

• 1-long listing or buyer broker contract commitments
• 2-Would-be listing agents telling sellers a higher price than is likely to happen in order to secure the listing.  We call this “buying the listing”.
• 3-trying to sell listing off market to double end it – marketing a listed home, holding open houses prior to the property being on the multiple listing service
• 4-no lockbox & all appointments through the listing agent only
• 5-bad terms in the “other terms and agreements” section of the listing or buyers’ contract that create more restrictions on the buyer or seller

#1 – How long of a listing time frame is too long? If homes that do sell are selling in an average of 60-75 days (which is often the case in some of Silicon Valley markets right now), then a 90 or 120 day listing agreement is not excessive. A six month listing could be  a little long. A one-year listing agreement is unconscionable unless the property is a luxury home or distressed property with a very long “months of inventory”.

Ditto that with buyer-broker contracts.  Often 6 months is more than enough.  Be careful if your agent wants a longer term than that.

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Lately I am seeing a trend with short sale listings which is anecdotal but, I think, significant.  More and more, I am seeing and hearing about lenders which are requiring an unrealistic sales price in order to approve short sales.  When I say “unrealistic”, I mean more than the market can bear in many cases.

I personally had this experience in recent months: I had a short sale listing in Sunnyvale which was priced at market value last summer.  We got three offers, all within 2-3% of each other.  This is a pretty good indicator of market value. (Had we been underpriced, the contracts would have come in higher.)  The bank wanted about 15% more – an absolutely unjustifiable figure.

What to do?  I ran the comps and submitted them.  No impact.  I then paid an agent to do a BPO (broker price opion).  That number came in about 1.5% more than my sales price.  The lender, in turn, ordered an appraisal (which we appreciated), and that came in another 1.5% higher than the BPO (or about 3% higher than the sales price my seller had accepted).  Common sense would dictate that the lender would accept as authoritative the appraisal price, right?  Not so.  They wanted another 1.5% higher still – higher than their own appraisal value, certainly higher than market value.  Needless to say, the buyer did not want to overpay for the property.  Fast forward a six months and the bank now has taken back that townhouse at foreclosure.  It could have been avoided had the lender been willing to be realistic.

As I speak to my colleagues in the real estate industry here in Silicon Valley, I am finding that my story with this one listing is not so unique. I see homes on the market in various west valley communities (Almaden, Cambrian, Los Gatos, Saratoga, Campbell and nearby San Jose areas) that are listed at a reasonable price and then speak with the Realtor and learn that the banks 10 to 15% more than the list price.  At best, this is at the high end of market value (but in many cases is higher still and completely crazy). The agents know that if the house is listed at the bank’s number, they’ll never even get an offer.

It looks as though many of the banks would rather just take the short sale properties back in foreclosure.  Why? There are incentives for them: they can write off losses, they don’t have to deal with second or third lein holders, and they may even have silent mortgage insurance, which doesn’t help if they accept a short sale – it only helps if there’s a foreclosure. (more…)

Silicon Valley home buyers sit on pins & needles once they have written their contract to purchase property.  They wait and wonder and may have trouble sleeping while they expect a response. This is normal, of course. It’s hard to wait.

What happens after the Silicon Valley real estate contract is signed?

Sometimes, offers are presented in person by your buyer’s agent directly to the listing agent and sellers and there may be a nearly immediate response, or at least something soon after – within a few hours.  More often, though, now offers are presented by email to the listing agent, who in turn gets it to the seller either at a personal meeting or also by email.  Most of the time there is a counter offer, but sometimes there was enough communication ahead of time between the agents that in fact an offer is written in an acceptable fashion and is simply accepted by the sellers without any counter (or there were multiple offers and one was good enough to accept without a counter).

Some real estate trainers insist that every offer should get a counter offer – sellers should never simply accept the contract presented by the buyers

Some real estate trainers (who are teaching Silicon Valley real estate agents what to do) insist that every offer should always be countered so that buyers do not later worry that they overpaid. “Make them work for it” so they don’t have buyer’s remorse is the theory.  The bigger the fear of “buyer’s remorse”, the more likely that the agent will further negotiate the offer – at least a little. (more…)

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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Buying and selling homes is stressful no matter who you are or what the occasion may be.  It is even more difficult for those for whom English is not their native language and for whom the US is not their native land.

First there’s a language challenge (depending on English fluency).  Even more, there’s a cultural challenge in terms of how homes are bought and sold. Add the normal stress to the cross-cultural confusion and there’s a recipe for misunderstanding, bafflement, surprises and upset.  One of the biggest areas for clashes is how negotiations are carried out.

I have had the pleasure of traveling to many places around the globe and to live in Italy for the better part of a year while in college (in Florence, and yes, I loved it).  I remember very vividly some of my own cultural frustrations and although I was fairly fluent, missing a whole lot of social cues. I had to work to learn to negotiate for simple things like fruit and sweaters in the open air markets.  And I was just 20, not trying to purchase anything as significant as a house or condo.

My clients today come from all over. Typically, at any given time, more than half of my clients are foreign* (and I love working with them and hearing about their experiences, customs and traditions).  Every once in awhile,  we discover that buying and selling expectations are vastly different from Silicon Valley to wherever they came from. Here are a few:

1. Expecting to negotiate at every turn, starting from the time the seller accepts the buyer’s offer and continuing until close of escrow (not done here: you negotiate at most two times – first when writing and countering offers and second prior to removing contingencies, if something new is learned during the course of the inspections.  If you negotiate at every opportunity, you will have everyone angry at you!)
2. (more…)