Fire Season and Silicon Valley: Caution Needed to Prevent Disaster

Edit: this post was originally published July 17, 2010, but the concerns are still as real as ever. Broken links have been updated, but the body of this article is, for the most part, left as it originally was over a decade ago.

 Danger!

Fire sign at main entrance to Belgatos SmallerSince early July, fire danger signs have been out at Belgatos Park in Los Gatos (and I suspect at other parks throughout Santa Clara County too). To the right is the sign at the park’s main entrance.  It admonishes the visitors:

High Fire Danger  No Smoking No BBQs

To anyone who’s lived in Silicon Valley long, this is understood – the fire danger is quite high here in summer.  Unlike most of the east coast, it does not rain here in summer (at least not often and not much), and our green grasses and plants of spring turn to kindling very quickly.  One stray match, hot cigarette butt or one illegal firework can smolder into a flame which grows fast with the smallest amount of wind to destroy property, animal life and potentially human life, make breathing bad for days and leave a scar on the land.

Fire Danger at Belgatos side entrance smallerThis sign at the entrance may not feel very compelling to some as the lush green grass in the background would seem to contraindicate restraint.  But venture to the park’s side entrance on Bacigalupi Drive (or hike up the trails) and you’ll understand immediately why this is nothing to take lightly.

Except for one little tuft of partially green grass, “cardboard hill” is entirely dry. So is the rest of this beautiful open space.

Preventatative Action

If you live close to or have open space in San Jose’s Alum Rock, Almaden, or other east foothill areas or the west valley places like Los Gatos, Monte Sereno, Sartoga, Cupertino or anywhere the foothills, your property is likely considered to be in a high risk fire hazard zone. If so, each year you are mailed information from Cal Fire reminding you of your obligation to provide clearance around your home and to cut down the dead brush.

 

 

Just outside of the main entrance to the park there’s a large and open lot which has a few trees, some prickly pear, and a lot of grasses and weeds in winter and spring.  (It also had a rattlesnake it in by the prickly pear when my daughter walked past with our dog one day a month or two ago.) Below is a pan of two pics I took with my Blackberry and later stitched together – the park entrance is out of sight but is a little to the left of this photo.

 

Lot at Westhill and Belgatos Lane next to entrance to Belgatos Park in Los Gatos July 2010

 

These owners have done as needed and disked the field to help prevent fires or the spread of fires.

There are things you can do to “harden” your own home and create defensible space if you live near open space to make it more resistant to fire. Check out the whole list on the Cal Fire site, “Prepare for Wildfire“.

 

 

 

Real Estate Values Don’t Go to Zero

Image of a kitchen and words Investment thought - real estate values don't go to zeroWith the cornavirus in full swing, fear and uncertainty have given the stock market a beating this week. For many of us who are self employed, there will be no pensions, so over the years we squirrel away what we can into our retirement accounts. As I checked our online accounts this morning, it hit me how solid realty investing is overall, because real estate values do not go to zero. Stocks can.

Of course, there can be exceptions, but in most cases, even if a house is fully destroyed, there is still value in the land. For condo owners, even though the unit is just airspace between the walls,  the ownership includes a fraction of all common areas, and that, too, includes land.

Real estate investing is a challenge in Silicon Valley, as it takes a large down payment of about 45-50% down to be cash flow neutral (and not losing money each month).

For many, the way to become a landlord is to purchase a first home, live there and improve it for awhile, then save for the “move up” house but keep the original one as an investment. That’s not easy to do, either, since saving the down payment is a huge challenge at all price points – unless one has great stock options, and the market is doing well when they are needed.

Just buying your own home to live in, though, is not really an investment per se, but it is a great to grow wealth over time as the mortgage is paid down, values go up (buy and hold!), and eventually the property should be mortgage free and valuable. It is also a hedge against inflation.  This can be a retirement home for the owner, or the owner can sell it, cash out, and move somewhere less costly, where the proceeds from the sale can support them in retirement.

There are many good things about buying realty, whether for investment or for one’s own future. When I look at my retirement accounts this week, I’m grateful that we also bought our first home in 1989 and our move-up home in 1999. Even when home values fell during the great recession,  the value did not disappear entirely. Real estate is tangible. Many consider it a safer place for their hard earned dollars, since real estate values don’t go to zero.

 

What remodeling or replacing work requires permits and finals?

CAR seller disclosure: Seller Property QuestionairreIn this highly overheated seller’s real estate market in Silicon Valley, I’m suddenly seeing many more houses being sold with extensive remodeling and no permits and finalsnone!

Sellers can get away with this in a hot market, meaning that buyers have limited power to walk away from such a home because the inventory is scarce.  But what happens when things cool down to, say, a balanced market?  Suddenly those houses and condos with massive, non-permitted remodeling may lose a lot of their appeal, and  home sellers needing to move just then may pay the price in what pickier buyers will pony up for it.

Some home owners meekly claim to believe that they only need permits if they expand the original footprint of the house.  That’s just plain wrong, and most likely know better, too.

How can you learn about a home’s remodeling history?

First, then, how do you as a home buyer know the situation with the remodeling? Most of the time, San Jose area home sellers provide upfront disclosures and inspection reports, and the answer may be revealed there.

CAR vs PRDS paperwork

We have 2 sets of contracts, disclosure forms, etc. in use here: the Peninsula Regional Data Service, or PRDS, and the California Association of Realtors, or CAR.  Here’s one place where the PRDS forms are far better than the CAR forms.  The CAR seller disclosure, the Seller Property Questionairre, simply asks if the seller is aware of any alterations, modifications, remodeling, replacements or material repairs on the property.  Many sellers are not careful and just mark “no” to every answer, but this is an extremely important question! So buyers, ask yourselves, does everything in this home look unaltered from the time it was built?  Probably not.

The PRDS Supplemental Seller’s Checklist asked for detailed information on what was done, when, and whether permits and finals were obtained.  The first set of questions is for the time the current seller has owned the property, but then it’s asked again regarding prior ownership.  This is so much more thorough!

 

PRDS SCC alterations and permits

 

Many municipalities (towns, cities, counties) have online permit history.  It may not always be accurate, which I why I strongly advise home owners to keep a copy of everything, but more often than not it is correct – so it’s a good place for consumers to check.  In San Jose it’s a breeze with SJPermits.org.  These are things which buyers and sellers investigate, not real estate agents (nor do real estate licensees check the Megan’s Law Database, but consumers should). (more…)

Fumigation needed? Be aware of burglary risk!

This morning I read an Action Line column in the San Jose Mercury News which got my attention: a house was burglarized during a fumigation and many valuable items were lost. “The burglar tore through the tent and took some very valuable and deeply sentimental items, important documents, and our Social Security cards as well as a lot of credit cards.”  This surprised me as the structure was full of poison.  Apparently with gas masks donned, the thieves had no fear and helped themselves to the unguarded goodies within.

I wondered if this was a fluke or if it was a growing trend.  After all, the economy has been rough for years. Perhaps criminals all over California and the U.S. as a whole have had to get creative and take more risks.  So I went to Google to see what kind of response I’d get with a search for “burglary during fumigation“.  Indeed, it’s a nationwide problem of theft during tenting for termites and this incident in Silicon Valley does not appear to be an oddity, but rather part of a growing trend.

Until a few years ago, perhaps 10 or 15 years ago, security guards were required to be on hand when a property was fumigated.  I don’t recall when or why this changed, but today guards are not routinely on site for fumigations in the San Jose area – at least not to my knowledge.

What to do?  It is a real pain to live in a townhouse, house or other home and have it tented.  You not only need to move out for a few days, but also you must generally move out all food (some exceptions).  Many people also want to clear out bedding and other goods, including valuables.  But most folks won’t completely empty a house and then move right back in again. That’s costly in terms of time and money.  Even in a vacant house, some items could still be stolen such as thermostats, potted plants in the back yard, and light fixtures.  (That happened to one of my clients in Cambrian a number of years ago.)

The presence of a security guard is likely your best bet for improving the odds that your property won’t be targeted by thieves.  Your fumigator or pest control company can probably suggest a reliable firm with trustworthy employees who have all the necessary requirements (licensed, bonded, insured?).  If your property is vacant (between owners or tenants), you may not feel that this cost is warranted and be willing to take your chances.  But if you fumigate your home and it’s got valuables within, I would suggest investigating some security.  It’s not a secret when a building is fumigated, and apparently too many bad guys consider it “open season” on your possessions.

Related reading on termites and pest control issues:

Would You Recognize Signs of Subterranean Termites If You Saw Them?

How often should you get a termite inspection?

“The house was ‘termited’ four years ago. Do we need to do it again?” – Question of the Day!

 

 

 

Should you write an offer with no contingencies? What is the risk with a non-contingent offer?

Non-Contingent Offers and the Real Estate Market Conditions Advisory

This week I’m having a deja vu from 2000.  If you were here in Silicon Valley then, during the “dot com boom”, you remember a frenzy with the hot sellers market, of home buying with multiple offers, and prices rising rapidly.

In some parts of the market, it’s back.

One of the ugly parts of that market is back too, the “non-contingent offer“.  I’m not talking about offers subject to the sale of another home (aka “contingent offers”). I’m talking about home buyers waiving their inspection contingency and their loan & appraisal contingencies.  (Not clear on home buyer contingencies? Please see my article: “Competing against multiple offers: contingencies and timeframes“.)

Listing agents know better than to give a counter offer demanding a non-contingent offer; that’s a lawsuit waiting to happen if the buyer feels coerced and later gets some sort of nasty surprise. But boy oh boy, do they know how to hint that it’s what they want.  And that’s not a lot different from demanding it.

The Market Conditions Advisory

Silicon Valley home buyers are given many disclosure and contract papers to sign when submitting their bids to purchase residential real estate.  It is important to read and understand them and the risks about which they warn.  One disclosure which is used – or should be used – on most every transaction is the “market conditions advisory“, which warns of risks in multiple offers and some of the ways that buyers may try to have the winning bid that may not really be a good idea in the long run.  The full name of the form is this: (more…)