Being an FHA home buyer in Silicon Valley is a challenge right now, especially if you want what everyone else wants: a nicely updated and remodeled home in a good area with no “issues”. (Issues meaning things like high voltage lines, busy roads, flood plains, or being too close to stores or spots not everyone wants to be near.)

The Problem with Condominiums and FHA

I need to start by explaining that things aren’t always the way they look.  We tend to think of condos as looking like apartments, with no yard, for example.  We think of townhomes as a two story or more home with neighbors on the sides but no one above or below.  And we think of houses as freestanding buildings with a yard around it.

That’s really how things look.  But how these different types of homes are owned may be another thing altogether.  For FHA home buyer purposes, this makes a huge difference.

Some townhouses and even some houses are not owned the way they look, but are held in condo ownership.   A good example of this is The Villas of Almaden, a beautiful &  gated community at Meridian and Coleman in San Jose’s Almaden Valley. Structurally, many of the buildings are houses - but they ar “condo ownership” and are stored under the condo label in our local MLS. What makes these buildings be condos? Practically speaking, in addition to their own space for their particular unit, the owners also own a percentage of everything else, such as the pool, grassy areas, tennis courts, private roads, etc. They also have a share of the liabilities of the condo community, too. 

If you are an FHA buyer and you want a San Jose area condo (or any home which is held in condo type ownership), you have to make sure the complex is FHA approved. We had the option of getting individual units spot checked until February 1st, but that has now been eliminated. Getting an entire complex approved takes time, perhaps 60 days, and money - and most buyers don’t want or cannot take on that kind of financial liability (and most sellers don’t want it either). Here is the link for the HUD site which will list for you the condo communities which are FHA approved.   So it is important to know if the townhouse you’re looking at is owned like a townhouse or owned like a condominium.  It can be painfully disappointing to think that a home can be bought with FHA backed financing, only to later discover that it can’t due to the type of ownership and lack of approval of the asociation.

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Last April, US News named San Jose as one of the top ten places in America for kids to grow up. The article cites the good weather, abundance of parks (including skateboarding parks), major sports franchises, and the Children’s Discovery Museum as reasons why San Jose made the grade. The article generally mentioned the importance, on this list, of low crime too.

It’s a great piece but being so very brief, misses much of what makes San Jose and the south bay (particularly Santa Clara County, Silicon Valley), such a great place for children. 
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San Jose’s Almaden Valley offers a great deal of scenic beauty, much of it enjoyable on foot or by bicycle.  The Alamitos Creek Trail also includes a hint of the region’s past.  Recently I took some photos of the Pfeiffer Stone House, a storage shed for the Goodrich’s Free Stone Quarry that was built around 1875.

You’ll find this curious bit of history at the corner of Graystone Lane and Pfeiffer Ranch Road, along the Alamitos Creek Trail.

View Pfeiffer Stone House in a larger map

This is water district land and the stone hut sits behind a chain link fence together with a plaque put up by the Mountain Charlie Chapter of E Clampus Vitus.

The creek is to the right of this photo, and the Graystone area is off to the left. (To see a few more photos, please click on the link below.)
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In some parts of Santa Clara County, a very significant percentage of homes for sale and homes under contract (pending sale) are “short sale” listings.  This is particularly true in entry level areas like San Jose’s Alum Rock area, the Blossom Valley district, the Santa Teresa area, etc.  These homes can be hard to sell and even harder to close - but why? They are usually well priced so should just fly off the market, but often that isn’t the case.

The trouble with short sales is that there are a lot of people involved, so there are a lot more places for things to go wrong. Unfortunately, they often do go wrong. I believe the national average is that about 20% of short sales that sell (go pending) actually close.   Think of it like hurdles:

• The first hurdle is getting a buyer to write an offer (despite the significant risk that the sale will never close)
• The second hurdle is getting the seller to accept the offer (and the seller’s agent to agree that it is viable)
• The third hurdle is in having the lender or lenders approve the purchase agreement - it is MUCH easier if there’s only one lender, very difficult if there are two lenders and extraordinarily hard if there are three lenders. Sometimes lenders would rather foreclose than work with a short sale, especially if there’s more than one loan.
• The fourth hurdle is the seller approving the lender’s terms, which may or may not be easy to swallow (some lenders require that a seller promise to pay back some of the money over time or upfront).  Sellers reserve the right to refuse the terms.
• The fifth hurdle is the agents (and possibly buyers) approving any concessions the bank requests. Sometimes the bank will require a commission cut. Agents may or may not be willing to accept what the bank requests. (Imagine having your income suddently cut by 1/3 or 1/2. You might say no too.) Buyers may be informed that the bank requires them to pay more costs too.
• The last hurdle is keeping the buyers in escrow during the prolonged period between when the seller accepts the offer and when the seller accepts the bank’s terms.  Sometimes unscrupulous buyers will write offers on several short sales and then wait to see which one is accepted first - and bail on the others. This causes a great deal of harm to the seller, who may have been nudged closer to foreclosure.  On the other hand, though, with only a 20% chance of success, buyers wonder why they shouldn’t take this approach just to hedge their bets.

I’ve seen all of the above happen in my Silicon Valley real estate practice: buyers writing offers on multiple homes, sellers refusing bank approvals, lenders foreclosing when a great offer was on the table, agents refusing commission cuts. 
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It’s the holiday season in Silicon Valley: what to do? 

The downtown San Jose Holiday Parade is always the first Sunday in December (mark your calendars!), following one day after the downtown Los Gatos Holiday Parade, which is always the first Saturday in December.  (This year, 2009, it’s December 6th.)  Yesterday I stumbled upon a website dedicated to the San Jose parade and learned that you can find info on it on Facebook, MySpace, and Twitter.

There’s lots to do in downtown San Jose during the holidays. This year, in addition to Christmas in the Park  (runs to Jan. 1st) and Winter Wonderland, there are performances of The Nutcracker to be enjoyed, courtesy of Ballet San Jose (the 30th anniversary of that production and Christmas in the Park here, by the way).  Ice skate between the palms at Downtown Ice, which runs through January 18th this year (2009). 

The Cathedral Basilica of St Joseph (Roman Catholic) offers free musical events in mid to late December as well, and all are welcome. This is the 8th annual “Season of Hope” series.   Concerts are every night beginning December 12th and running through December 23rd, with performances at 7pm and 8pm.  The Cathedral’s website does not list the dates of particular performers, but the Valley Catholic newspaper does (a couple of the links show up as “tiny urls” instead of names, but most performers are listed).

Although it’s not a Christmas, Hanukkah or NewYear’s theme, it’s worth a mention that the Tech Museum of Innovation is hosting a fabulous Star Trek Exhibit  right now too. There’s an enormous display,called “Star Trek The Exhibition”, a couple of rides (extra cost),  plus you can view Star Trex IMAX in the theater (also an extra cost).

Visit the Farmer’s Market year-round on Fridays at San Pedro Square.

There’s lots to do in Silicon Valley through the month of December - this is just the tip of the holiday iceburg!

For things to do in Los Gatos this month, please see this post on my Live in Los Gatos blog. Holiday Events in Los Gatos for 2009.

For more things to do in and around Silicon Valley over the holidays, please check out these links:

Santa Clara Chamber of Commerce’s blog
Downtown Campbell
Milpitas Chamber of Commerce

Just found this fabulous 18 minute video online, Valley of Heart’s Delight, complete with an embed code so that it can be shared. I hope you enjoy it! Apprently it’s a 1948 remake of a 1925 look into Santa Clara County’s agricultural industry of days gone by. Interesting images of the orchards, blossoms, San Jose neighborhoods, Moffett Field, Santa Clara University & Mission, San Jose State, Stanford University, and business of yesteryear. It is much like a promotional video, showing current day Silicon Valley in its most flattering light.

Images and audio include:

Orchards
hillside views
downtown San Jose
Alum Rock Park (with a pool!)
Mt Madonna
The Rosegarden
Mission Santa Clara
Santa Clara University
San Jose State University
Stanford University
Santa Cruz Beach

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!