A couple of days ago, I showed a home for sale along the Los Gatos border with Cambrian Park (area of San Jose) to a buyer couple.  It’s tenant occupied, was pretty much a mess  (and on top of being in disarray was dark – curains drawn, no lights on etc.) and the person who lived there walked us through the property, telling us things about the owners and the situation that really didn’t make my buyers want to purchase the home at all.  Between the condition of the property and the info-packed narrative, my clients could not wait to leave.   No sale!

If you own income property (or rental property) in Silicon Valley and want to sell it, you may be aware that a 1031 tax deferred exchange is something to consider.  What you may not remember to do is to strategize about what to do with your tenants.  How do you get them to be cooperative, responsive to showing requests and neat? And preferably, to be absent or at least quiet and out of the way when the home is shown?

When residential real estate is for sale, the occupants’ lives are turned upside down.  It’s no small amount of inconvenience and risk to them with the traffic in and out, the calls at all hours, the loss of privacy and on top of everything else, the risk of personal propertybeing stolen.  If you are a homeowner, you are motivated because you will get cash out of the deal at close of escrow.  If you are a renter and the home you’re renting or leasing suddenly goes on the market, there’s not really a “silver lining” built into the scenario most of the time.  That can set the stage for trouble and even financial loss.
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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!)
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Perhaps one of the most important concepts that Silicon Valley home buyers need to appreciate is that someday, they’re going to be Silicon Valley home sellers.

It is true that there’s no such thing as a “perfect house” anywhere in Silicon Valley. No matter what your budget, there is always a change you might want in any home. (Often buyers want about 20% more than their budget allows, in my experience. This is equally true of first time homebuyers as it is for move up or even luxury home buyers.)

So it comes down to which compromises you’re willing to make. There will always be compromises – but which ones are acceptable, and which ones aren’t?

It is extremely helpful if you can prioritize, in order, what you must have or strongly prefer to have, in your next home. Sometimes couples have some, but not all, of the same preferences, wants and needs. Where they get into trouble in homebuying is when they have different priorities. In fact, that can make it almost impossible to buy a home and have everyone happy at the end.

I would like to suggest that one of your top priorities ought to be “resale value” and “resale ability”. Some may object, “I am never going to sell this home!” but in truth, we don’t know the future. If you buy a home with a problem that makes it hard to sell generally, and you get stuck having to sell it in a bad market, it will be brutal and possibly even risky if you later are selling due to any financial hardship.
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Buying & selling a home is usually stressful for consumers, and some circumstances can heighten the anxiety further (being in multiple offers, buying a distressed home, or anything out of the ordinary).  Once you write an offer or receive one on your property, you may feel like a nervous wreck as you navigate the escrow period. In some cases, you may come down with a bad case of buyer’s remorse or seller’s remorse.

We’re In Escrow: Now What?

You will want insights and advice so that you’re sure that you are doing the right thing each step of the way.  Even if you have a great Realtor who thoroughly understands Silicon Valley real estate and is a fantastic communicator, perhaps you want some assurance from an outside source (who’s not being paid for closing the deal) that you really are making good choices in the home sale.

There are a bunch of bad ways to do this but also some good alternatives.

What not to do:

1. Don’t call all of your local Realtor friends whom you didn’t hire and ask for their input.  First, it’s not fair to them as businesspeople that you want their professional input but not for compensation.  Second, they aren’t supposed to meddle and it puts them in an akward position of “implied agency” in which they take on some risk (being your expert upon whose advice they rely) without the benefit of ever getting paid.
2. Beware the well-intentioned advice of non-professionals who may not be up to speed with the current market conditions, construction, your purchase agreement, etc.  Sometimes the “over the cubicle wall” advice can be very, very upsetting as these folks get a homebuyer or home seller freaked out – often over nothing or over a misunderstanding of the situation due to a lack of information.   Most often, this “advice” is from completely unqualified people and will compound problems rather than help to solve them.

How about some good alternatives?

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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.
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What does it take to be a successful move-up buyer in Silicon Valley right now?  How hard is that to do? What does it take for a move up scenario in the San Jose area to be a possibility?

(1) Buyers are extremely picky – most want a turnkey, perfect home.

(2) Homes that need work (updating, remodeling) are selling at deep discounts, if they sell at all.

(3) Loans are harder to come by then they used to be. If your credit is not perfect, clean it up!  Save for a bigger downpayment, especially in the arena of jumbo loans.

If you must sell the current home to buy the next home, you’ll need to get your house or condo into ideal condition.  If you can buy the next home without selling the current one, it’s a great rental market!  You may want to investigate the possibility of investing by holding your current home and renting it out. Talk to your tax professional about the ramifications of doing this before you decide.  (more…)

Thinking of selling your home in Silicon Valley?  No matter what kind of residential real estate you may own, this book offers guidance that will be a huge help in maximizing your profits from the sale of your home and doing it with the least amount of “hassle” possible!

Written with the consumers’ biggest questions in mind, “Get The Best Deal When Selling Your Home in Silicon Valley” aims to help property owners tackle the enormous task of selling their homes from start to finish. We, the authors, (Ken Deshaies and I, Mary Pope-Handy), address the gamut of topics in this comprehensive book, from how to chose an agent (or whether to “go it alone”), the role of the internet in marketing and selling your home, presenting your silicon valley home in its best light (staging tips, showing tips), selling your property in any kind of market (buyers market or sellers market), how to screen potential buyers and what to expect in the escrow process. The second part of the book discusses buying the next home, avoiding mortgage headaches, provides a moving list and a real estate glossary.

How can you get this book?

The book is available throughout the greater San Jose and Silicon Valley areas in Border’s and Barnes & Noble bookstores. If they run out, it can be ordered for you. Or order it online at Amazon and have it delivered to you at your home.

It is also available directly from me and is a tool I provide to prospective seller and buyer clients. (Although the book is largely about homeselling, the second part of the book is also about home buying.) Call or email me today for your free 30-60 minute consultation and receive this book at our meeting.