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Sell Your Home in 2021

Sell your home in 2021 - it is a great time to sellAre you thinking that you might want to sell your home in 2021? If so, you may be wondering how Covid-19 will impact the marketing and sale of your property. It’s stressful to sell in normal times, but during a pandemic it’s a whole new level of concern.

 

How hard will it be to sell your home in 2021?

 

The short answer is that it’s a lot easier to sell a home for top dollar right now because there’s a dire shortage of inventory. I know, we’ve been saying that for years, but it has only gotten worse since 2013 when it started feeling scant. The odds are that it will stay that way for at least the next six months or so, and perhaps longer. The months of inventory is a rock solid statistic that displays how quickly the inventory of available homes is absorbed. (If no new inventory were to come on the market, but sales continued at the same pace, how long would it take for the available inventory to all be bought? That’s the question being answered.)

The flip side of this, of course, is that if you are planning to sell one home and buy another, it’s no slam dunk since there are many multiple offers. But for the selling half, it’s amazing.

Here are the numbers from 2014 to now:

 

Months of Inventory - Santa Clara County Single Family Homes

 

 

I did spot check pre-2014. Our numbers go back to 2003 on the MLS. Except for November 2017, no other Novembers were below 1 month. November 2007 was the worst at 9.8 months of inventory.

In other words, it doesn’t get any better than this in terms of the odds of selling.

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No one cares about your wet bar

Home buyers do not care about your wet barThis is going to sound a little harsh, but it is true.  Sellers: some, perhaps many of the things which you think are huge selling points are not important at all to today’s home buyers.   Most Silicon Valley house hunters do not care about your wet bar. They care even less about your expensive wallpaper, or your pricey and heavy 1970s era curtains, which they probably hate. In fact, many of the improvements you made when personalizing the home for yourself may have cost you a lot of money, but many California home buyers either won’t like them at all or even find them to be a negative.  That is often the case with wet bars!

If you’re thinking you’d like to sell your home in 2021, keep reading!

If wet bars and wallpaper aren’t important, what is?

Buyers DO care about your foundation (please, no cracks), your roof (hopefully newer with many years left on it), your plumbing (tell us it’s 100% copper).  They care a great deal about updating and remodeling of things seen – bathrooms, kitchen, popcorn ceiling removed – and unseen.  Is the electrical really as old as the house? Is the sewer line on its last leg? Did your disclosures mention that rats are a problem?  Do you have an issue with water in the crawl space which will eventually wreck the foundation? Does your house back up to a train line, school, freeway, high voltage line or something else undesirable which cannot be fixed? Buyers do care about these types of things.  Above all, Silicon Valley home buyers want security.  They want a solid house without problems.  They don’t want to worry. It is scary enough to buy at all! (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 in Santa Clara County among SFH 2020-11-13

 

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 9% in April 2020, but then it did bounce back up into double digits until October. It may well do that in November, too, once we have cleared the election jitters period.

What does the lower percentage of cash sales mean? In Santa Clara County, we saw a declining number of pending sales in October. I believe that together, these point to less buyer confidence, or perhaps more buyer fatigue.

Here’s that chart (posted recently in my newsletter and also in the Santa Clara County market post on this site):

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Ever See a Black Widow Spider? We Do Have Them in San Jose!

A few years back I attended a property inspection in San Jose and we found an unwanted resident in the garage: a black widow spider. Needless to say, did not stick around after she was found!

In case you haven’t seen one, I thought I’d share the pic here (click to see more below). Sadly she wasn’t my last encounter with these spooky locals. In fact, I’ve been seeing all too much of them over the last three years! At least this time, we always found her outside.

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What is an exclusion in a real estate contract? What is an inclusion?

What is an exclusion in a real estate contract? What is an inclusion? Both of these refer to fixtures at the property which is for sale. If you want to sell your home in 2021, it’s very important to understand the “law of fixtures” as it relates to what you leave and what you take with you – unless the inclusion or exclusion is specified in the contract.

What is a fixture?

Generally speaking, a fixture is any item affixed or attached to the house, townhouse, condo or property which is installed with the intention that it be there permanently.

Examples of fixtures (items which stay or are included):

  • built in in cabinets (in the bathroom, kitchen, or anywhere else)
  • lights mounted from the ceiling
  • built-in ovens or other appliances which are built-in
  • in-ground (not potted) rose bushes.
  • built in fire screens
  • a fireplace insert
  • window coverings
  • wall air conditioning unit
  • built in speakers
  • built in wine fridge
  • hot tub (unless it is a portable model, which most aren’t)

The exception to the rule is anything attached solely for earthquake safety.  This would be the case if you have a large hutch which you have bolted to the wall so that it doesn’t topple in the case of a big quake. In Silicon Valley, fixtures are normally included with the sale of the home.

What is an exclusion?

Exclusions refer to fixtures which the seller does not want to include with the sale of the real property (real estate) but which otherwise would or should stay.

 

Examples of fixtures and personal property (

Exclusion examples:

  • there may be a light fixture in the dining room which is a family heirloom and the seller does not want to leave it with the house
  • an in-ground plant, bush, or small tree that the seller wants to take when moving out
  • curtains which match a bedspread or other decor
  • stereo speakers that are built in
  • surveillance equipment, such as a Ring doorbell or camera (I saw this recently where the seller wanted to keep it)

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What is a bedroom worth?

A common mistake among real estate agents and consumers both is estimating a home’s probable value using only the living space’s square footage. But what about the total number of rooms? Specifically, what is a bedroom worth?

Clearly other factors have a significant impact, such as remodeling done (or deferred maintenance that’s taken place), whether or not there are special features such as pools or tennis courts, the quality of the landscaping, or the presence of a view. Some of these are challenging for pinning down a value since they may be unique to a particular property and there may be no similar comparable properties or “comps”.

All homes, though, have bedrooms. We know (almost intuitively) that it will be challenging to sell a 1 bedroom home and that 6 or more bedrooms may sound like a boarding house and have diminishing value for most consumers. (I’ve known 6 bedroom homes to be presented as 5 bedrooms plus a den or home office.)

 

Calculating value - what is a bedroom worth?

 

Recently I ran into this issue again, where some lovely people I was discussing the market with appeared to be looking at their house’s likely sales price based only on square footage and not seeing the highly likely limitation of having fewer bedrooms than most home buyers want. I decided it would be a good study to pull up two and three bedroom sales in San Jose over recent years and check on the average sale price of each – keeping the properties within a fairly close band of square footage and lot size so that it would be a level playing field. (Most accurate would be in a very small area with a very tight range of square footage, but going that narrow likely leaves us with too few homes for a decent pool of data.)

I did a spot check of smaller, older houses in  San Jose 95126 (roughly the Rose Garden, Shasta Hanchett, and St. Leo’s areas) and used square footage of 1000 SF to 1500 SF and small lot sizes of up to 6000 SF. Also I removed sales on busy roads, such as Hedding. Bottom line: the 3 bedroom houses were selling for an average of $897.72 per square foot, while the 2 bedroom houses were purchased at an average of $837.04 per square foot.

What if we looked at a broader area, and not just older houses? The next section covers all of San Jose and also from 2017 to the present.

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Expired, Canceled, Withdrawn Listings: What Happens If You Take Your Home off the Market?

Photo of a bedroom with the name of this article in an orange box: Expired Canceled Withdrawn Listings - what happens when you take your home off the marketExpired, canceled, and withdrawn listings are all frustrating situations for both home sellers and the Realtors they worked with. After considerable effort, and likely also significant cost. the property failed to sell (or it went pending, fell through, but did not re-sell). What happens next?

What is the difference between expired, canceled and withdrawn listings?

Let us begin by discussing the difference between canceled, expired, and withdrawn listings and how each impacts your vulnerability to being swamped with messages from real estate agents.

  1. A withdrawn listing means that the property is still listed for sale with a real estate agent or broker but is no longer listed on the multiple listing service (MLS).  It’s still a valid listing and other agents should not approach you about working with them since you are still in a contract to sell your home with your current agent.
  2. An expired listing means that the contract for your listing has come to an end and the listing is no longer in place.  Other agents may approach you since there is no valid listing in place.
  3. A canceled listing is one in which the seller and agent or broker agree to terminate the listing. Since the listing has ended, other agents are free to contact you.

In a nutshell, if your Silicon Valley home’s listing becomes either canceled or expired, real estate sales people may contact you, but if it is merely withdrawn, they are not supposed to reach out to you because you still have a valid listing in place. (more…)

Homeowner’s Insurance, Title Insurance and Home Warranties

Insurance Choices Home Buyers Face

Insurance Choices Home Buyers Face

Home buyers & sellers in Silicon Valley hear about various types of real estate related insurance products and they can sometimes be confused with one another: Homeowner’s (or Fire) Insurance, Title Insurance and Home Warranties. We’ll discuss them today and hopefully will clear up the confusion.

Insurance Choices: Homeowner’s Insurance, Title Insurance, and Home Warranties

Homeowner’s Insurance pays you money to cover losses in the event of a fire or other unseen catastrophe (such as a tree falling on your home, a fire caused by lightening or a fence falling down in a windstorm).  Often there’s a deductible but beyond that you have major coverage for losses in most cases. There are some caveats, of course.  If you purchase a home using financing, your lender will require you to buy this type of insurance.  It is sometimes also called Fire Insurance.

Homeowner’s insurance does not cover damage from earthquakes or flooding from creeks, rivers or dam failure.  If you have a fixture that fails and the home floods, though, that is probably covered.

Homeowner’s insurance does not guarantee that if something is destroyed it can be rebuilt.  For instance, in older parts of Santa Clara County (such as downtown Saratoga, San Jose, Los Gatos and Willow Glen) there are detached garages built right up against the property line or very close to it.  In most places there are now setback requirements of about 5 feet or so.  Should that garage burn down (or be destroyed by termites or anything else), it can only be rebuilt, most often, if it’s moved.  Creating a new foundation is expensive – and that may not be covered by your HO insurance.
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Lies that sellers want to believe

Lies that sellers want to believe - brightly colored row houses - your paint colors are idealThis week I got a postcard from another real estate agent wanting to list homes in my neighborhood. It featured lies that sellers want to believe.  Often what sellers want to hear is not what they need to hear to make well informed decisions that will benefit them the most in the long run.

Most common types of lies that sellers want to believe

PRICE – Lies that sellers want to believe can relate to the probable buyer’s value of the property. If you interview a few agents and all of them but one tell you that the house is likely to sell for $1 million, but one agent says it’s worth $1,150,000, that agent may be telling you an inflated value in the hopes of “buying the listing”. Will the home sell for more because it is listed high? That’s not how it works.

The importance of pricing your Silicon Valley home competitively cannot be overemphasized. If you do everything else right but get the pricing wrong, the odds are strongly against getting the highest price possible.

CONDITION – Other lies that sellers want to hear may involve the pre-sale prep work. “You don’t have to change your home at all – you can still get top dollar” is usually not true unless the home is a tear down, and it is counter productive if you want to net the most from your home sale. You can, of course, sell a home in any condition, but buyers pay more when the home shows better. (more…)

Property Tax Basis Transfer for Seniors

Interested in moving your property tax basis when you sell your current home and buy the next one? For those over 55 in California, this is a great one time option.

There are actually two propositions involved.  Prop 60 applies to moves within your own county, and Prop 90 relates to moves between counties which are participating in the transfer arrangement. Unfortunately, of California’s 58 counties, only 10 have the cooperative agreement to accept a property tax basis transfer from other participating counties.

Cooperating Property Tax Basis Transfer Counties (Prop 90)

The counties cooperating in the property tax basis transfer are only these, as of the date of this posting: Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura.

Some of the basics for the property tax basis transfer:

  • Homeowners must be 55 and older at the time of sale of the original property.
  • Homeowner must be on record both for the home that’s sold and the replacement property.
  • The replacement residence must be equal to or lesser in value than the original residence.
  • There are special rules for multi-family (duplex, triplex, fourplex) properties and for mobile homes.

In the most typical scenario, a senior homeowner would sell a house (or townhome or condo) and “downsize” to another, less expensive, smaller house or condo.  If the homeowner had been in the first property for a very long time, then the low tax rate would be hard to give up, but Props 60 and 90 enable that homeowner to go to another, less expensive home and carry the old tax rate along – one time, and either in the home county or in one of the participating counties.

I have known seniors to sell a house in Los Gatos, Saratoga or San Jose and move to The Villages or to gated senior communities out of the area but closer to their grown kids and make use of these two propositions.

It should be noted that while the price of the replacement home must be less than the home being sold, that doesn’t mean that the new home must be smaller. I’ve known people to move out of area and get a larger, newer, nicer home – at a lower price tag. So it’s really an economic downsizing (or “right sizing” as some like to say now).

For more information and to get all the details, please click on the California state page for these two propositions.