Balance Fail

I think this topic is appropriate since I’ve been pulled in every direction except TOWARD my blog lately!  My apologies for the hiatus.  My priorities have shifted lately, in a good way, but I need to find my balance again.  I am totally guilty of having a very well scheduled day and then getting derailed by everyday distractions.  Working out, however has been something that I’ve been prioritizing lately.  If I don’t wake up early enough (6am at the latest), I will make time over the lunch hour, or during my two year old’s nap around lunch time if I am at home with him that day.  I saw this photo today in another blog and I stole it because it’s really appropriate.  It reminds me that I should never have an excuse to not take care of myself.

With work getting busier by the day, spending a good hour per day exercising, and taking on new responsibilities (creating my corporate blog) I am going to have to as hard core about my schedule as a: 

Go Grasshopper, GO! (ok, I just wanted an excuse to post this wacky ninja photo.)

Good News: Housing inventory decreasing in Bay Area

The San Jose Mercury News published some interesting statistics regarding the (South) Bay Area housing market and thought I’d share them with you:

1.  As of Friday, May 1st,  5112 single family homes/condos/townhomes were for sale in Santa Clara County (San Jose area).  That is down from 5979 on March 20th.

3.  A year ago in early May of 2008, there were 7,340 for sale in the same category.  That was UP from 6,900 six weeks earlier.

 What does this tell us?  First of all, the market is heating up and more homes are selling than last year.  This is excellent news, because our supply of homes was far too large to really support a housing recovery.  Now that inventory is declining, supply and demand are moving closer to being in balance.  This is a crucial factor in the recovery of housing prices. 

Here is the article:  San Jose Mercury Article

And here’s more good news about the US housing market and economy in general: Bloomberg

Pricing Strategies – Part II

Let’s pick up where we left off and discuss a few more strategies involved with selecting a price for your home:

1) Pricing low.  When is it appropriate?  Yes, it is possible to price too low, although I’ve met multiple agents who would argue against that.  To clarify, let’s say that all recent comps point to your home selling at $775,000.  You are wondering if you should price it at $799,000 and leave room for negotiation, or if you should price at $750,000 and get multiple offers.  Ask yourself the following questions:

     a) Is my competition priced high? 

     b) Are there a good number of pending sales relative to active listings in this price range?

     c) Are the current pending sales selling in under 3 weeks?

If your answer to all of these is ‘yes,’ then it is probably safe to list at $775,000.  After doing so, if you wait a few weeks, get a good number of showings, and then receive an offer at $770,000, you will know that your home was actually priced at value, not under value like you thought.  If it had really been priced low, you would have seen a much different response.

2) Positioning yourself against the competition.  It is always important to look at your current competition when you are pricing a home.  I like to go see properties, since it is hard to tell anything about a home from the photos online.  Once you are familiar with the quality of the competition, you need to see how long they’ve been on the market and if they have had any price reductions already.  Talk to the listing agents of each home and see if there is currently any interest on each home and if they are getting showings.  With all this knowledge, you can write in the “actual” price that each will probably sell for.  (Many might be over priced, a few might be priced low).  Use these numbers, NOT their list price, as comparisons and benchmarks when pricing your home and you will get much better results.

3) Timing based on neighborhood competition.  This is a very tricky subject. On several occasions I have had my Sellers inform me that another house on their street, or in their neighborhood is about to go on the market.  They want to know whether they should wait to list their house until after that home goes on, or if they should beat them to the punch.  It’s hard to prevent a neighbor’s listing from affecting your home sale in some way.  If you list first, they may come on the market right after you and price just a hair lower than you.  If this happens, I would advise you NOT to do a quick price reduction because this will seem desperate.  Most buyers will still come see your home, especially if it looks good in the photos and is fairly similar in price. 

On the other hand, the other house might come on the market first and sell right away, leading you to wonder if you should have acted more quickly while the buyers were hot.  Or, worse, they might price way too low for the neighborhood and affect your ability to sell at a higher price.

I think the best thing to do is see if there is any way you or your agent can find out how much they intend to list for, and what condition the home is in.  With this knowledge, you can decide if it’s even worth worrying over.  Perhaps you can convince them to list higher! Most of the time, I have found it is best to take your time getting the house to “show quality” with all your marketing done beautifully.  You will almost always have competition, so just try to make sure your home looks just as good or better than the rest!

Pricing Strategies – Part I

Sellers, pricing a home in a recovering housing market is vitally important!  Unfortunately, you can ask 5 different Realtors, and they will all give you different answers.  Are any of them wrong?  Perhaps!  It depends on whose point of view you are talking about, what type of market you are in, who the competition is, and what type of product you are offering.

From a buyer’s standpoint, the price on a home should be seen as a ballpark number, accuracy TBD (to be determined) by our own careful analysis.  How did they get that number? What was going through their heads?  Are they motivated? Are they following the comparables or are they pricing high or low?  The answer is that you will probably never know the truth, and really you shouldn’t care because YOU plan to come to your own conclusions.  You will study the history of the sales in the area, understand the dynamics of the current market, and look carefully at the competing homes for sale.

However, Sellers, don’t think you can slap any old number on your house, because the vast majority of buyers are NOT highly analytical, nor are their agents.  They are emotional, competitive, nervous, etc.  For that reason, pricing, and the response it creates, is crucial.

Whether you are a buyer or a seller (or both!) here are two key things to consider:

1) Be realistic about the house and it’s shortcomings. This is especially difficult when you are the seller and it is your primary residence.  We tend to have inflated views of our properties, and no one wants to be a Debbie Downer and tell us otherwise.  Is your floor plan unusual or choppy (attached sun rooms are almost always a negative)? What are the pros and cons of your location (and of your competitors’ locations?) How close are you to traffic/power lines/stop signs/bus routes? How are your schools, and how are similar homes in the nearby (and slightly better) school districts priced?

2) Know the risks of pricing high. We are tempted to “test the market” and price a little high because we want to leave room for negotiation, or we don’t trust our Realtor to put our interests above his or her own, or we think that we’ll never know how much money we can get for our home if we don’t try for more.  All are valid concerns.  Here are the risks: In a high-end market homes are like Chanel, Gucci, Tiffany’s, Louis Vuitton.  They are “blue chip” as Carol Rodoni (a local and highly respected real estate analyst) says, and “blue chip homes don’t go on SALE.  Kmart homes do.”  If you have a luxury property and you have to discount your home because you have tested the market, there is a high likelihood that you will end up eroding your potential sales price by a good 10%.  So, it is better to price realistically – you will walk away with more money at the end.  In addition, pricing a home high that is in a middle market (ie. Sunnyvale, Almaden, Santa Clara, Willow Glen – which are currently stabilizing) can have detrimental effects on the surrounding home values if you end up having to discount the property later.  Buyers will smell blood in the water and there will be no chance of you getting what the home is really worth.

When is it ok to price a little high?  In an escalating market, or in a market where multiple offers are occuring frequently, or in a market where you have a uniquely desireable property (be very careful here – see number 1).

Stay tuned for Part IIon this complicated topic!

Who is a “first time homebuyer” in California?

A recent survey of 500 First Time Homebuyers who had purchased a home in California in 2008 uncovered a few interesting statistics:

1) The median age was 35.

2) 53% were married, and 47% were single.

3) The median time spent looking: 6 months.

4) 70% made 3 unsuccessful offers before buying. (the top reason was that the Seller wouldn’t agree to their offer)

5) The median number of Realtors interviewed was 4.

So, just because you are young and single is no reason not to follow your dreams and take control of your future. Just take your time, find the right Realtor, and be tenacious making smart offers until a Seller says “yes.”

4 ways to get into a bigger home

Your family needs a bigger home, but you feel stuck.  You have a great income, but due to the reduced equity in your current home and the demand for a higher down payment on your next purchase, moving up seems impossible.  Here are 4 possible solutions that could help, depending on your situation:

1) Assume the seller’s loan (take over their terms and payments and put into your name).

pros:  Most traditional home loans are unassumable, but these days banks are more willing than ever to avoid foreclosing on additional homes.   If the home is in risk of default or is already on the path toward foreclosure, they MAY be willing to have you assume the loan, even if your down payment is smaller.  This could allow you to get a great price on a home and possibly avoid a 20% down payment.

cons:  Could take some time to put this deal together, or you may do a lot of work and find out it’s not possible.  Therefore, you will more than likely have to sell your place and move into a rental as a temporary solution while you secure your next property.  The seller’s loan may have a higher interest rate than a new loan would have and you might not be able to refinance until you have increased your equity in the home.

 

 2) Buy a fixer upper, negotiate as many repairs as possible, and get a seller buy-down on your interest rate.

pros:  You could potentially buy a bigger home for the same price as your current home.  The seller buy-down will reduce your interest rate so that it’s easier to save for larger improvements and remodeling.

cons:  Not everyone is cut out to do a remodel.  It is time-consuming and there can be hidden pitfalls and problems that end up costing you more money than you thought.  Always get the opinion of a contractor you trust before making an offer (or removing contingencies) on a fixer upper.

 

3) Borrow from your 401k. (Note: consult with HR and your tax advisor prior to making this decision)

pros:  Provides you with extra cash, and you pay yourself interest, not your bank!

cons:  If you get laid off or change jobs, you may have to pay back your loan in full or suffer tax consequences.  Make sure you consult with your HR department to be clear on the rules before you take money out of your 401k.

 

4) Purchase a lease-option to buy

pros: Purchasing an option to buy the home at a future date for an agreed-upon price and then leasing it could be one way to get into your new home while you work on building the down payment to buy it.  Many owners will put a portion of your rent toward the down-payment later.  This all needs to be spelled out in the agreement.

cons:  Many people get into lease-options with the best of intentions, but never end up being able to buy the home because they couldn’t save enough money or repair their credit enough to make it possible.  You need to be VERY CLEAR about what you will have to do in order to buy this home.  Speak to a good financial planner about monthly goals that will be required to execute the purchase.  Otherwise, you will have been paying really high rent for no good reason.

Please note that these are all non-standard methods of home purchase (especially numbers 1, 3, and 4) and you must do your homework.  I cannot guarantee that these techniques will work in every situation or be financially advisable given your unique financial situation, so consult with your Realtor, CPA, Real Estate Attorney as appropriate before making any decisions.

 

 

 

 

 

 

Home investor market heating up as perceived value improves

In the last week I have been hearing from other agents and people I meet at open houses that the demand for rentals is going up.  A couple weekends ago there was a home in East San Jose that had 50 offers on it, and other “A location” homes on the East side are seeing similar responses.  Investors there realize they can be cash flow positive on day one with a modest down payment.

In the middle-markets of Santa Clara County, I’ve met several people who are buying one or more rentals in the 500-700k range and are doing minimal cosmetic repairs and renting them out instantly with multiple interest.  I recently tried to place a friend in a rental in Cambpell, and there were 3 other applications in.  The place was a modest 3/2 home on a corner lot of a pretty street (mediocre schools), and they got $2300 (renter paid utilities) for it.  All applicants were very well-paid high tech families.

In the higher end markets (Los Gatos, Cupertino, Los Altos, Saratoga, Almaden Valley), I’ve recently met a couple families who are looking to buy homes in the 1 million to 1.5million range using heftier down payments so they can get into a conforming loan ($729k or lower).  One of the families had sold a property a couple years ago and have been sitting on the money (smart AND lucky!).  Rather than put it into the volatile stock market, they are planning to buy a home in an upscale neighborhood with the most desirable schools now, while inventory is still high and demand is only starting to recover.

Interesting times!

To-do lists as therapy

I’ve started to realize that I’m not alone in my obsession with to-do lists.  And while some people talk through their stress, and others absorb it (not healthy), I chose to make lists and clear my brain of whatever mess is occupying it.

I don’t have a favorite style – I’ve done graphic flow charts, project plans, outlines, bullet points.  I recently did a fairly complex “network diagram” to describe my life.  I told you, I’m obsessed.

This weekend a few unfortunate miscommunications occurred and had me running in circles – worn out and frustrated.  So here I am at Barnes and Noble, drinking a coffee and making my newest list, designed to create more order and efficiency in my head.  Since we bloggers are simply exhibitionists behind computers, I’ll share it with you:

————————————-

Things I have to accomplish on a daily basis

·         Make Lunches for daycare/work

·         Dishes

·         Laundry – at least one load and put away dry stuff

·         Plan Dinner (or delegate)

·         Fun outdoor activity with Grant (walk, park, etc)

·         Work – lead followup, twitter, blog, check in on 10 members of my network and introduce self to 5 new people I’ve never talked to before.

Be more efficient: Only clean up toys twice: At lunch and bedtime.  Plan dinner the night before.  Make lunches while grant is having breakfast.  Do dishes while Seth gives grant a bath (or vice versa)

Things I have to accomplish on a weekly basis

·         Cleaning the floors

·         Cleaning the bathrooms

·         Cleaning the stove, microwave and fridge

·         Grocery shopping

·         Weeding

Be more efficient:   Choose one big chore per day that I’m home with Grant: Tuesday – floors, Friday bathrooms, Saturday – Stove, Microwave and fridge, Sunday – weeding.

Menu planning on Friday night for weekend grocery shopping at swap meet, costco, etc.

Things I would really like to accomplish that aren’t in the normal routine:

1.       Update website

2.       Custom Blog background

3.       Matching custom twitter background

4.       Paint master bedroom and bathroom

5.       Get a new rug for Grant’s room

6.       Steam clean carpets

7.       Plan an outdoor toddler party to celebrate the new picket fence being completed

8.       Finish “Daddy and Me” Scrapbook (in time for fathers day)

House projects (in order of priority)

1.       Picket fence (in progress)

2.       Attic vent

3.       Paint house and plant front yard tree (non-fruiting plum? NF Olive?)

Falling in love with my home again

For most of my life I’ve trained myself to look ahead: This is nice, but what is the next thing I want?  College is fun, but what comes next?  This job is fine, but how can I make more money?  I bought this house, but one day I’ll buy a better, bigger one.  I’ve gotten into a pattern of always looking ahead, always planning and goal-setting.  It’s kind of addicting… to set goals and reach them, but I think it makes me sort of manic: constantly antsy and unsatisfied.  I’ll surely never stop goal setting, but in the last few weeks I’ve started to become aware of the simple beauty of life, and love, and nature, and I’ve re-evaluated they TYPES of goals I’m setting… less materialistic and more around personal and professional growth.

It’s probably completely counter-productive of me to bring this up as a Realtor, but I’ll be candid and tell you I’m rethinking the “bigger house” goal.  First of all, our place is a really cute little house on a great street in Cambrian (San Jose).  My neighbors are absolutely amazing… so supportive (we recently had our dog Phoebe put down, and they were so supportive – bringing over gifts and offering kind words).  Plus, our local elementary school is phenomenal (Sartorette – Cambrian School District), and there are lots of kids in the neighborhood.  There are so many people that struggle with either bad neighborhoods or bad neighbors, or who truly have outgrown their current place.  We are so blessed that none of these are issues.  On top of that, our house has a great floor plan - very open with a good sized eat-in kitchen and room for a dining table.  We have hardwood floors and good sized bedrooms.  We have a huge front yard which we plan to put a picket fence around in a couple weeks.  It’ll make an awesome play area for Grant and will be great for play dates and birthday parties.

So now that I’m falling in love with my house again, I’m looking at “her” with new eyes, and I’m not so sure I’m willing to part with her yet… why mess with something that works so well?

Fun and Cheap: Summer Activities for Toddlers

This post is really just a brainstorming list for my own purposes, but I thought I might as well do it here so that others can benefit!  What I’m hoping is that I get some comments sharing other good ideas…. (hint, hint).  For the record, my son is 1 and a half, so if these activities seem basic, that’s because we have a limited attention-span and skill set we’re working with here.  I will probably add more to this list as I think of new things.

1) Red Light, Green Light.  We just discovered that Grant LOVES this game.  Say “Green Light” and run around until someone says “Red Light” and then freeze.  Repeat until exhausted or bored.

2) Play Dough.  I need to go buy a set of play dough.  Note to self – must supervise carefully to prevent eating.  Here is the play dough website with a bunch of cool ideas, including recipes for new colors.  If you’re really crafty, you can make your own play dough.

3) Playing in the sprinkler. Nuf said.

4) Exploring parks in San Jose. Here is a list of San Jose parks that have play grounds – http://www.sjparks.org/Features/playgrounds.asp 

5) Sponge painting.  Take a new kitchen sponge, cut it into pieces, and have him dip it in non-toxic Crayola paints in a tupperware bowl and dab it on paper.  Swirl a couple colors together for more interesting pictures.

6) Go on a Choo Choo Train in the Santa Cruz Mountains: Here is the website for Roaring Camp Railway.  So much fun!!!

7) Buy some wooden clothspins and play Clothespins in the Basket outside.  Kind of like a toddler version of Horseshoes.  Here is a How To article.

Ok, that’s enough ideas for today…. Will perhaps add more later!