Circumstances under which a home is being sold
“Red flags” are clues that something is wrong or potentially wrong. They’re the hints that we need to investigate something further, the sign that we should be on alert.
Some parts of San Jose, and Silicon Valley generally, enjoy beautiful older homes with classic styling and beautiful finishing work. These properties and neighborhoods are prized because they are not cookie cutter, not ranch, not too new. They may be Victorian, Craftsman, Spanish, or any number of other interesting architectural styles.
One area of Santa Clara County that is well known for both charming historic homes and unfortunately also some stuctural issues among those older houses is the Willow Glen district of San Jose.
On Saturday I showed some clients about a half dozen homes, all in Willow Glen, and we saw a lot of “red flags” which hinted of foundation problems, among others. I thought I’d share a few pics I snapped at one of them with my treo camera here. All of these were taken on the front porch of this house – all visible structural “red flags” before we ever set foot into the house.
Selling a home is always stressful, no matter the reason. But some circumstances are tougher than others, and perhaps the worst is selling a house or home after the death of a loved one or in the face of declining health, particularly with serious or terminal illness, specifically if the sick individual is living at the home which must be sold. Today we’ll discuss that situation.
How can you sell a property if the owner usually cannot leave for buyer showings and cannot really keep the home in top condition?
It is of course not ideal to have the property being listed, marketed and sold not show well and if the seller cannot step out when home buyers visit. But there are strategies which may help. The goal is to sell the home quickly, which normally will also cause the price to be as high as possible (given everything).
First, before the home is ever actively marketed: Continue reading
When a parent, spouse or loved one dies and he or she owned a home, there’s a lot for the survivors to do in addition to the very real and painful process of mourning. I have been through this with my own parents (and their house in Saratoga), a great aunt in Willow Glen and many clients in San Jose, Los Gatos and elsewhere in Silicon Valley.
Where to begin? in terms of settling the estate, it is wise to first speak with an attorney and tax professional about the property (will, trust etc. if applicable) and what they advise and require to help in doing what is required and adviseable. (I have some wonderful people I can suggest if you would like a referral.) They will try to help you to legally minimize capital gains and estate taxes and can advise you on topics such as when might be the best time to sell vis a vis the tax liability. This is extremely important and it can be very expensive to not take into account their guidance on this point, so I strongly recommend that you or other beneficiaries discuss everything with the attorney or accountant prior to electing whether the home will be sold, rented etc. in the short term.
How can a real estate professional help?
Most often, something you’ll need for the lawyer and CPA or other tax professional is a valuation of the home as of the date of death (whether or not there is a surviving spouse or co-owner). You can obtain this by hiring a licensed residential real estate appraiser who will do an appraisal for you. Alternatively, you may be able to engage a real estate licensee (salesperson) to do a competitive market analysis or comparative market analysis (CMA), which would provide the probable buyer’s value for the property. Continue reading
A kick out clause refers to language in the contract which permits the seller, in some cases, to cancel the contract with the current buyer. The current buyer is “kicked out” of contract. Another expression for the same idea is a “release clause” – the seller can release the buyer under some situations.
This is a bit of a surprise to most Silicon Valley home buyers, who tend to think that they can walk away from a property during their contingency time frames, but a seller is stuck with them, no matter what. That’s simply not true!
In the last few years, both the CAR and PRDS contract forms have been updated. Both now include language that specifies the seller’s right to cancel the contract. Both parties have rights and responsibilities. Failing to do what one has promised to do in the purchase agreement could potentially find that home buyer out of contract and without that home to buy. There are many shades of gray, and few things are automatic. If a seller is going to give a buyer the boot, there will be a “notice to perform” tendered first.
Let’s talk specifics. When can the seller kick out or release the buyer? Continue reading
Many of the statistics quoted by news agencies and real estate information analysts refer to the “active” inventory as not just the homes which are truly available, but also those which are sale pending but with contingencies still in place (whether huge contingencies, such as bank approval on a short sale or the normal ones, such as property inspection and loan approval). This often results in a more bloated look at what’s available than what is really the case, and it gives buyers the sense that it’s easier to purchase than it truly is. Let’s look at some statistics to see what’s happening over the last year, when it shifted from being a buyer’s market to a severe seller’s market for houses in Santa Clara County.
Normally there are more homes available (for sale, without a “sale pending” status attached) than there are closed sales each month. But right now, the available properties are being gobbled up much faster than new ones are getting put onto the multiple listing. Let’s view the graph to see the relationship between these two figures for houses listed and sold in Santa Clara County in 2012.
At the beginning of 2012, please note that the new listings (the red line) outpaced the sold and closed properties (green line). The delta between them shrinks over the course of the year, until in the fall they are nearly equal until closed sales far outstrip new listings. That is a complete flip in the market, and it represents a shift in power from the buyer to the seller, too. For those who prefer just the numbers, here they are: Continue reading
This evening I had a look at our multiple listing service, which for the Silicon Valley area is MLSListings.com, to get a sense of what’s happening with the short sale market here.
I was shocked at the low number of short sale houses, condos, and townhouses for sale in Santa Clara County. Right now there are exactly 48 single family homes and condos/townhouses for sale (and not under contract or sale pending) in the county. There are 362 pending and 154 which closed escrow in the last month. To get the absorption rate or months of inventory, we divide the solds in the last month by the for-sale number, so 154 divided by 48 and we get 3.12 months of inventory. That is fast, but perhaps most shocking is just the low numbers involved at all. Over the last year, there were 2372 closed short sales, on average a little under 200 per month.
This is a far cry from several years ago, where short sales seemed to be as contagious as the flu in winter. What happened?
Lots. First, we have a jobs recovery underway in the San Jose area, particularly in the high tech industries. Second, we have low interest rates and improving faith that the market is recovering, and since about Feb 1 2012, we’ve had an increasingly deepening sellers real estate market in the South Bay. That, in turn, has created rising prices and given back some equity to distressed, underwater home owners. This third item is key: because home owners can see that the tide is turning, in many cases they also can see that if they hang on, eventually they will be in a position of equity again. Not only that, but rents in many areas are rising rapidly too, making it possible in parts of the county to break even faster by renting out one’s home rather than parting with it for a loss.
Not everyone has it so good! Today I had a tradesperson at my house doing some post-flood repair work. He lives in Los Banos, where home values are down more than 80% from the peak. We have not really seen this in Santa Clara, San Jose and nearby areas – seldom were prices down as much as half! In Los Banos, it’s questionable whether home prices will ever catch up to the peak. In Cupertino, Palo Alto, Sunnyvale, Mountain View and similar parts of Santa Clara County, though, home values are at or close to the peak already. Continue reading
Mini update for Santa Clara County as a whole as of September 17, 2012 for houses in SCC:
Actives = 1295
Regular sales for sale = 1157 (89%
Short sales for sale = 95 (7%)
Bank owned houses for sale = 43 (3%)
Sold in the last 30 days = 859
Regular sales closed in last 30 days = 675 (79%)
Short sales closed in last 30 days = 151 (18%)
Bank owned houses sold in last 30 days = 33 (4%)
It seems that although short sales are in increasingly smaller part of the inventory of available homes, they are highly desirable and are showing up in the solds at twice their ratio of actives. Put another way, the absorption rate looks to be higher. Let’s check the math on the moths of inventory:
All houses in SCC: 1295/859 = 1.51 months of inventory
Regular sales in the county: 1157/675 = 1.71
Short sales in SCC: 95/151 = .63 moi (63% of one month!)
Bank owned homes: 43/33 = 1.3
All of these numbers are low, low, low – but the short sales are the lowest of all!
POST FROM APRIL 22, 2011:
Yesterday we looked at the types of home sales around Silicon Valley by price point. Not terribly surprising, most of the short sales and bank owned homes were in the lowest price ranges. Today we’ll look at this type of information not by pricing tier but instead by geography – in other words, by either town, city or district of San Jose (area). This post will not cover every area but will be a sampling a few communities, mostly on the west side of the valley (since that’s primarily where I work).
By way of reminder, the small image to the left reflects Santa Clara County’s houses for sale as a whole – all areas and all price points. (You can see the full sized image by clicking on it.) The green area represents “regular home sales” and the brick red and light orange signify distressed properties listed on the MLS for sale (red is short sales and orange is bank owned or REOs). Next let’s see a few regions within the county to see how things are faring geographically.
1. Almaden Valley area of San Jose – homes listed for sale by type – very few distressed properties on the market!
Almaden is a lovely southwest San Jose suburban community (zip code 95120) that grew up initially with the cinnabar or mercury mining activity. Today it’s an upscale area of more expensive homes than most of the county, it enjoys really good schools and scenic views of the coastal range as well as the Santa Teresa Foothills. Housing here is costly but residents love the quality of life. Since the cost of homes for sale here is high, it’s not super surprising, after seeing yesterday’s post, that there are very few distressed homes on the market here. Next we’ll check the other extreme…. Continue reading