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Silicon Valley homeowner associations: they’re not all alike

Read the HOA Documents for your Silicon Valley homeowner asssociationSilicon Valley homeowner associations vary widely, depending on a number of factors.

What do you think about living in a neighborhood with an HOA, a homeowner’s association?  For many, living within an HOA means a nice, tidy community.  For others, it’s like signing up for Big Brother telling you way too much about what you can and cannot do.

Silicon Valley homeowner associations – the scope

  • Some Silicon Valley  homeowner associations are small, have limited authority, and are self-managed
    • this could be a tiny group of townhouses with Planned Unit Development ownership, not condo ownership, on a public street
    • some HOAs only cover a shared pool and recreation facility and have no jurisdiction over landscaping, home paint choices, etc.
  • Some HOAs here are large, have a tremendous amount of authority, and have professional management
    • this could be for a condominium complex, for houses or townhouses in a gated community such as The Villages, or anything in between
    • the more the HOA controls, the larger the dues and larger the chance of the HOA financially impacting your property when you sell (not so much if the HOA only covers a shared pool)

Silicon Valley homeowner associations area vary tremendously in what they can and cannot do, and also in the types of rules which are enforced.

In Silver Creek, in the Evergreen area of San Jose, you can look around and see a vast collection of stuccoed houses with tiled roofing.  So it would not surprise you if your roof needed to be tile there. (more…)

Location research

Real estate location research onlineInterested in a home or area? Location research is something you can do upfront, before seeing a home or neighborhood. Researching the commute time, crime, hazards, convenience, and more before visiting a property before seeing it can prevent wasting a lot of time.

Realtors can provide valuable insight into homes, areas, disclosure package red flags, and more. There are many things that consumers can check on their own, though. I thought it would be helpful to provide some online resources to help. This is not an exhaustive list – think of it as a starting point.

Some location research information will be included in the seller’s pre-sale disclosure package via the Natural & Environmental Disclosure Reports. Normally in Silicon Valley those disclosures are available upfront, before buyers submit offers on a house or condo. If you have that NHD report, you may not need to use the links I’m sharing below. Not everything is disclosed, though. In some cases, buyers are given links to do their own research. That’s the case with the Megan’s Law Database, for instance.

Links to start your location research

Below are the promised links. I’d welcome your feedback!  (more…)

The percentage of all cash sales in Santa Clara County

In 2012 and 2013, Santa Clara County saw many single family homes selling for all cash, no loans. The peak may have been in March 2012, when the percentage of all cash sales was a whopping 25%. That was the beginning of a long housing boom, and today the percentage of all cash sales in Santa Clara County has settled down significantly, though it is still in double digits in most months.

Today I crunched the numbers on MLSListings.com (first pulling the number of sales per month, then the number of cash sales, and after exporting the data to excel, did the math to get the percentages). The chart below reflects the sales of homes sold with all cash, no loans in Santa Clara County among houses and duet homes, which combined are known as single family homes.  (Duet homes are not the same as duplexes.)

All cash sales, month by month, in Santa Clara County (single family homes)

 

 Percentage of All Cash Sales for SFH in Santa Clara County

 

The data from one month alone does not make a trend. Please note that in the percentage of all cash sales, above, we had under 10% in 3 times in the last year, but then it did bounce back up into double digits again, despite the raging Covid induced white hot seller’s market.  (more…)

What happens at an appraisal?

What happens at an appraisal - image with camera, grid paper, measuring tape, housesWhen Silicon Valley home buyers purchase real estate using a mortgage or loan, the lender will require that an appraisal be done. (This is true even if you do not have an appraisal contingency.)  The main reason for the appraisal is to protect the bank from the risk of its making a bad investment.  The question being posed is a simple one: is the house, condo, land etc. worth the purchase price?

An appraisal isn’t just a visit to the property, but more of a process. But first, who is the person doing the appraisal?

Is an appraiser another real estate sales person?

A real estate appraiser is a professional with a license specifically targeted for performing this work. It’s not the same as a real estate salesperson’s license. In California, they are regulated by the Bureau of Real Estate Appraisers.

The appraiser must evaluate the target property and arrive at worth based on comparable sales.  (There are other ways of arriving at value.  In the case of income property, for example, it might be important to look at the rent, expenses, cash flow and ratios of several factors to calculate value. Another angle may be replacement cost or cost for rebuilding.)  In most cases, though, comparable sales will be analyzed and this approach will be given the most weight.  We often refer to these as “comps”.

In many cases, the appraiser will do some research before visiting the property (and we real estate agents may email comps or other information ahead of the visit).

Once at the site, he or she will

  • measure to calculate the square footage of the house and garage (living space plus other space)
  • will take photos of the inside and outside of the house or condo plus the street view
  • plot out the basic floor plan of the home
  • verify that there are smoke detectors, carbon monoxide detectors, and water heater strapping as required for health & safety

Please note that no people can be in the images!

Sometimes the appraiser may ask the real estate agent who is present some questions about either the property or the sale.

Often the buyer’s agent will be the access person for the appraiser, but just as frequently it’s the listing agent.  Why should the listing agent take the time when it’s something for the buyer?

As I see it, a low appraisal will hurt my seller clients because it could cause the buyers to bail out or try to renegotiate the price.  For that reason, when I represent the sellers, I like to meet the appraiser and bring comps (or email them ahead of time) to help defend the price.  As the buyer’s agent, I also see risk that my clients may have to come up with more cash if the appraisal falls short, or have some other unhappy remedy such as cancel the same – that’s expensive, as in most cases not only does the appraisal cost a few hundred dollars, but inspections aren’t free either!  For me, I like to go no matter which side of the transaction I’m working.

How long does the appraisal appointment take? When is the report done?

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Open House tips for home buyers

Dos and Don'ts - open house tips for home buyersInventory is low, and home buyers are swarming open houses. Today I want to provide some open house tips for home buyers so that you don’t damage your odds of success should you want to write an offer on it later.

When visiting the open house, the listing agent may be assessing you while you are assessing the house. Visitors who are rude, combative, or inconsiderate – or perceived as such – may be at a disadvantage when offers are reviewed.  So are those who seem very unsure about the property. Be sure to present yourself as polite and considerate and interested in the home. It can make a difference!

Open house tips: what to do:

  1. Do tell the open house host if you are working with a Realtor, and share the name (or card, if you have it).
  2. If the listing agent or open house host has a sign in sheet, you can fill it in with your first names and then the rest can be your Realtor’s name and contact info.
  3. Do be polite with the agent and regarding the house or condo.
  4. If there are shoe covers provided, either use them, remove your shoes, or ask if you need to wear them at the very least.
  5. Do keep your children with you at all times.
  6. Please speak in normal or quiet tone of voice.
  7. Do keep a good amount of space between yourself or your group and other visitors or the open house host.

Open house tips: what not to do:

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Should You Buy or Sell Your Silicon Valley Home “As Is”?

For Sale As-IsWhat is an As Is Sale?

Many Silicon Valley home sellers want to sell their homes “as is” (or “as-is”). And most homes in today’s market are. But what does that mean, exactly?

Does it mean that the seller has made no repairs or renovations before listing the home? Or that they do not have to disclose if something is broken to a potential buyer? No.

As is means that the home will be conveyed to the buyer at the end of the transaction in the same general condition it was in on the day that the buyers wrote the offer. If the roof has leaks, the crawl space is full of termites, and the appliances do not work, that is how it will be on the day escrow closes.

What it means is that the seller cannot let the property condition deteriorate during the course of the escrow.

The seller must continue to maintain the home and land in the same general condition. So if the lawn was green and well trimmed, the seller cannot suddenly let the grass die and neglect to mow it. If a baseball breaks a window after the buyer and seller have entered into contract, the seller must repair it. The condition will not have to be better, but it should not be worse than it was on the day the buyer and seller agreed on the price and terms of the sale.

While the contracts most agents use in Santa Clara County and nearby today have “as is” as the default sales agreement, that doesn’t mean all sales are as is.

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Seller rent back after close of escrow: what do you need to know?

Forms Vary for Seller Rent Backs!If you are buying or selling a home in Silicon Valley today, you may be considering including the option to have a “seller rent back” after close of escrow. What does this mean? This is often referred to as “seller in possession after close of escrow” (often shortened to SIP) or “seller occupancy after sale”, or for more than 29 days, the “residential lease after sale” (RLAS)  and it’s not uncommon in the San Jose or San Francisco Bay Area now.

Most of all, a rent back means that after the sellers have been paid and the new owner is on record, the seller stays on as a tenant and the buyer takes on the role of a landlord. The buyer as the new owner will carry home owner’s insurance (mandatory if there is a mortgage – the lender will insist) and gets a set of keys.

The terns for this tenancy relationship are drawn out in a separate addendum to the purchase contract. Depending on how long the term will be (less or more than 30 days) and which purchase agreement form is used (PRDS or CAR) the paperwork varies a bit. Whichever form you use and whichever side of the rentback you are on, here are some key points to keep an eye on:

  • Amount of security deposit, if any
  • Amount of rent being charged, if any
  • Length of the rent back or lease (most buyers have loans, and most lenders start attaching fees to rentbacks longer than 29 days and do not permit more than 60 days or they consider the property “non-owner occupied” – if you aren’t careful, you could walk into an expensive mistake here!)
  • Who will pay for things like gardening, utilities, pool maintenance, and HOA fees, if any
  • Who will hold the deposit (the buyer or the escrow company?)
  • Under what circumstances the new owner can enter the property

When the market is super over-heated like it is today, we tend to see nominal security deposits and free, no-cost rent backs. Usually the tenant (seller) takes care of utilities, garden, pool maintenance. (more…)

Price mirage

Price MirageA price mirage happens when the list price of a home for sale is far below what the sale price will be. Right now this is a very common strategy from listing agents and sellers, and buyers need to know about it.

Those homes are not really available to many of the home buyers who are excited about them and think that it will sell at or only 10% or so above list price. The gap is much higher than that, particularly if a property sells in the first two weeks.

What is a price mirage?

Sometimes the listing agent and sellers very intentionally deeply underprice a property by 25% or more (to see how far the market will bid it up). I can think of a few local Realtors who are well aware that most of the buyers they attract with artificially low prices cannot truly afford their listings. But those buyers will crowd the open house and make offers which are low (a waste of many people’s time).

The articles about homes selling for $1 million or more over list price are becoming more common. Recently we were working on an offer along those lines, but the house sold for far more than that, about 49% over list price. It’s staggering.

Often the home is priced a a little low, but so many buyers pounce that the price gets driven up and out of reach, and that can surprise everyone. In these cases, let’s say a house looks like it should be worth $1,035,000, but the home goes on the market at $1 mil even, but buyers are so desperate that it gets many offers and sells for a little over $1.1 mil. That is common and has been for years. That’s not a price mirage because the list price wasn’t tremendously less than what appeared to be the probable sale price.

What we are seeing now is along the same lines, but with lower list prices and higher sale prices. Buyers cannot look at the list price and know if they can afford the property or not. They wonder if it’s underpriced by 10%, 30%, or even 50%?

What should home buyers do about cheap looking homes that might be a price mirage?

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What does it mean to be “out of contract” in a home sale?

Is your indecision putting you out of contract? Worried looking woman with laptop computer.Every region of the country has some unique real estate vocabulary and phrases.  Here, in Silicon Valley, when we say “you’re out of contract“, it’s another way of saying “you are not doing what you promised to do in the purchase agreement that you signed” (meaning the real estate contract).  In other words, there is a seller or buyer default happening.

“Out of contract” is not a legal term. I remember hearing a local real estate educator say “there’s no such thing”. It’s not an official status. But it is a way of describing behavior that’s not in alignment with the contract’s express promises.

Contractual “Save the Dates”

Both sellers and buyers make promises to do certain things and most of these promises are tied to time frames or dates.  Here are a few of these time-sensitive promises or contractual obligations:

  • sellers agree to leave the utilities on until close of escrow
  • sellers promise to maintain the home until close of escrow as it was on the day the property went into contract (so mow the lawn, water it etc.)
  • buyers assert that they will get their initial deposit to title within a set number of days (the California Association of Realtor’s form states 3 business days or provides a blank to fill in an alternate number – it’s often 1 business day here)
  • buyers promise to remove contingencies within the times they stipulated in the offer
  • sellers will move out in according to the date set out in the contract
  • indecision over material facts or between buyers may make it hard to decide whether or not to remove any contingencies
  • buyers agree to take possession (move in) per the time/day agreed to in the purchase agreement (not before)
  • sellers bind themselves to having repairs done in a certain manner (depends on contract and clauses, if promised)

At one time or another, I have seen all of these items not adhered to by the parties who were supposed to make good on their word, and stranger violations that I don’t want to write about here lest I give someone a bad idea. I have seen sellers not move out on time (in some cases, elderly sellers who grossly misjudged the effort required to vacate.)  The failure to do so causes stress and anxiety, and sometimes worse: fear and anger.

Out of Contract: Why the Delay?

Sometimes, when either party is consumed with worry, a kind of emotional paralysis can set in. Luckily that is rare, but I have seen it. Buying and selling a home is extremely stressful, and once in awhile it coincides with other things: the death of a family member, a diagnosis of cancer, a divorce, a relocation that one party doesn’t want. So many things can happen at the same time. You may have heard the saying that “a confused mind says no”. With real estate, the confused mind doesn’t write or accept an offer, or doesn’t move forward as planned.

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New Year’s Resolutions and Goals for Silicon Valley Real Estate Purchase, Sale, Remodeling

New Year's Real Estate ResolutionsAs 2021 comes to a close, it’s time to start looking forward to 2022. What are your real estate related goals and resolutions for this new year? Do you plan to buy, sell, or remodel your Silicon Valley home?  If so, this is a great time to sketch out your objectives and start early preparations to get the wheels in motion.

For South Bay home owners who want to make 2022 the year to sell and move, it’s wise to plan ahead so you can maximize your return on investment of time and money. A clean, well-prepared listing gives buyers greater confidence, and confident buyers tend to make higher offers! Take the time to do it right and you will reap the rewards of your effort.

Quick Tips for Planning to Sell a Home in 2022

  • Hire your real estate professional early in the process so that she or he may provide additional guidance from the beginning. It won’t cost more to hire early and you get more help. You may even save money by avoiding costly mistakes. A good agent will help you prepare your listing and determine a timeline to sell, whether you plan on selling this spring, next year, or next month.
  • Decluttering is one of the biggest task for home sellers and it can be where you get the most bang for your buck. Presenting a property to buyers in a way that feels like home, but not your home is a balancing act. Some homeowners choose to move out and stage their home to sell, which has been increasing in popularity and is certainly a successful way to declutter! Sellers occupying a listing should commit to depersonalizing the house and creating a marketable space. Some sellers will discover this is a much bigger undertaking than expected, and requires more time and energy than originally planned. This can be particularly challenging for long-term residents, sellers who are downsizing, and seniors. Talk to your Realtor before embarking, as some items may be helpful for staging and you don’t want to totally empty the house! Completely empty homes do not sell as well as those which are thoughtfully furnished.
  • Fix everything that is broken or in disrepair. No home is perfect, and buyers will not expect it to be (unless it’s brand new, of course), but everything you can repair is one less thing the buyers will worry about when writing an offer. That lightbulb that’s burnt out? Replace it now so that it doesn’t wind up in inspections or worrying buyers about the electrical system! Low cost repairs are often an excellent investment, but so can some more expensive fixes. I have had sellers who willingly go above and beyond preparing their home, from repiping to reroofing, see a clear return on investment for their efforts! However most sellers don’t want or need to do that much work. A bid with a price for the work from a reputable company is usually enough. Speak with your listing agent before tackling any major projects.
  • Clean everything: windows, window tracks, hardware, lamps, mossy patios, etc. A clean home is inviting and feels well cared for. Professional cleaning can make lightly used carpets look new again. Areas that easily show wear, like grout, caulk, and kitchen appliances, can give that “new home” feel when they are looking fresh!
  • Plan to have pre-sale inspections, but hire inspectors with your real estate salesperson.

Tips for Silicon Valley Home Buyers This Year

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