Properties off MLS...

Properties off MLS…. controversial.

 A lot has been said and written on the subject of properties selling “off MLS”, meaning they have not been on the Realtors’ Multiple Listing Service and were sold before making it to that database, common to all Realtors.

 Coming from a country where a common database of properties for sale is nearly non-existent, I can definitely vouch for the huge benefits that such a common database offers, both to buyers and to sellers. We could go on and on describing those benefits, but let’s just say that it pretty much ensures that a property for sale, by virtue of being exposed to all the agents around, will sell for its real, highest market value (low, high, but the most accurate result of supply and demand).  Also, a buyer will find all that is available for sale in one place, which means more choice and less wasted time going from one provider of information to another provider of information.

 So, why sell a property “off MLS”?  There are some unique situations where the sellers do not want the whole public to know that they are selling, and that is understandable.  There will always be special circumstances (i.e. very high price range, specific sellers’ needs or preferences, etc..).  But these exceptions aside, I see mostly downsides to not offering a property for sale through the MLS:

-          Less information for buyers and sellers about current sales activity, and "comparables". How do you price a property if you don’t know how, and how much similar homes sold for? This information is easily accessible (and reliable!) in the MLS.

-          A situation where both the seller and the buyer are “gambling”; one gambles that he/she bought for a lower price than if the house had been offered to all potential buyers, the other one gambles that he/she sold for the best, highest price.

-          A lack of confidence by the clients-buyers that they are being treated fairly: after looking for a home for several months and missing out on several offers, a buyer is not happy to learn that “that” house was for sale, but (s)he did not know about it,

-          The creation of smaller entities, or “channels”, where such properties are “known” or “available” to select agents and their clients; again, this is going back to a system without a reliable common database for all, and in my opinion does not serve the public well. Indeed, even those agents may be unaware of some other offerings in a different channel, and their clients will miss out on those opportunities.

 The practice of selling real estate through an MLS is not perfect, but it is the result of an evolution, and it is immensely practical and fair, and someone coming from a system where it does not exist sees it right away.  As an agent, I keep close tabs on all channels showing properties available for sale, even “off MLS”.  But using “alternative channels” excessively undermines the MLS, and I am afraid this will make it more difficult and unpredictable for the public to find or sell real estate – and a lot less efficient.

Let me know what you think!
Thanks for reading,

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Property sales price is public.

Up until the end of 2014, property sales prices could be withheld from public records.

If someone selling a property did not want the sales price to be disclosed, they just instructed the escrow officer to show the transfer tax amount on a separate page from the Grant Deed (the Grant Deed is public record).

Since January 1 of 2015, this is not going to be possible any longer: the hidden tax form will no longer be accepted by the County Recorder, regardless of when the documents were executed.  The tax amount will have to be shown on the Deed.

What newspapers do when they publish the recent real estate activity is this: they calculate the sales price from the Transfer Tax (when shown on the public document), and show the final sales price.  So from now on, it will not be possible to hide the sales price...

Thank for reading!
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates
A place worth noting: Our Brother's Home in MountainView

Silicon Valley real estate: ratio sales price/list price - end of the year inventory.

The number of properties available for sale is always smaller around the first of the year, and the market less active as the Holidays take people to other places, both in their minds and physically.

This year for the area covering the five cities of Los Altos, Los Altos Hills, Mountain View, Palo Alto and Menlo Park, we start the year with a total inventory of homes for sale of 37 (24 of those are over $2 million).  This total includes houses, and condominiums/townhouses.

As a comparison, last year we started with a total of 51 properties.  This, coupled with the huge activity I see at open houses, indicates that for a foreseeable future there is a large imbalance between the number of buyers and the number of sellers.

For the area covering the whole County of Santa Clara, we start the year with a total number of properties for sale at: 606…  Last year, we had 751 homes for sale at the beginning of the year.  Even though many areas are not as extreme as around Los Altos and Palo Alto, we still see a strong sellers’ market out here, especially in the entry-level / lower price range.

My monthly market update, accessible in a detailed form on my local newsletter, shows that the average ratio of sales price over list price is lower towards the end of the year (this graph is for the County of Santa Clara):

These are two facets of the local market around the New Year: statistically, properties sell for less of a premium, but the fact is that it is still a very strong sellers’ market.  Many clients ask me why and the answer is not straightforward.  I think that it reflects on the fact that over large numbers, statistically, there may be more properties on the market that must sell, as compared with the rest of the year.  It may also reflect on the fact that the quality of the real estate offerings is lower, and/or there are fewer buyers looking.  Remember, these are statistics.  However what it does not mean is that a desirable property, in a desirable area (schools, prime location etc…) will sell for less, if there is not a “time pressure” factor involved.

Any input on this?  Do let me know,

Thank you for reading,

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Foreign investments in the U.S. real estate market.

Foreign investment in the US real estate market.

Year-in year-out Realtors in the Bay Area deal quite a bit with foreign buyers.  It is interesting to keep some perspective on this phenomenon at the national level.

From March 2013 to March 2014, foreign purchases in US real estate increased 26% from the year before, to a total of $92.2 billion (National Association of Realtors Profile of International Home Buying Activity).

4 states accounted for 55% of the total: Florida, California, Arizona and Texas.

Nearly 60% of reported international transactions were all cash, compared to just one-third of domestic home purchases.  - Still 1/3 is an impressive number!

54% of all international transactions last year came from Canada, China, Mexico, India and the U.K.
Clearly, the United States remain a destination of choice for investors for its stability, and future prospects.

Separately, but still relevant to this subject, it is good to note that the foreign-born population by state looks like this:
- California: 25.4%
- New York: 10.8%
- Texas: 10.4%
- Florida: 9.2%
- the rest (~44% ) is divided between the other states.

Do you have an input on the subject?  Please let me know.!

Thanks for reading.

Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A noteworthy local non-profit event:  Coalition on Homelessness, SF

Getting a new loan - things to do and not to do....

Are you getting a new loan?  Here are some tips of things to do and not do, in order to facilitate the procedure.  Some are essential, while others are more subtle.

-       Always pay on time:  your payment history is one of the biggest factors in your credit score.

-       Monitor your credit regularly:  make sure you stay on top of your credit history. Be sure to check all 3 credit bureaus annually to make sure there are no errors.

-       Know your credit limits:  being close to or maxing out your credit limits may negatively impact your credit score.

-       Set up alerts, do not be late.  Set up email and text alerts, as well as auto-pay, to help ensure that you pay your bills on time and build positive credit history.  The first missed payment has the largest impact on a credit score, so don’t miss payments. If you are late, don't be 30 days late, and if you have difficulty, call your lender - often time they can work with you.

-       Do not do charge anything unusual on your credit card - no cars, no motorcycles - do not increase your debt ratio as you are trying to get a new loan. 

-    

Beware of moving debt. Be wary of moving around debt repeatedly - you need to pay debt down to improve your credit score. Also beware of moving large amounts of money during the loan process, unless you can document it thoroughly.

-       Know your debt-to-income ratio.  Lenders look at the amount of debt you have compared to your monthly income   - it’s good to keep that under 35%.
   

-  Good scores = Good rates:  better credit scores in most cases get you better credit interest rates.

-       Don’t open too many accounts: opening up a bunch of credit accounts you don't need may negatively impact your credit score.

-       Keep balances low:  keep balances low on credit cards and other revolving accounts  - this may help your credit score.

-       Think before closing accounts.  Closing credit card accounts may lower your available credit and could hurt your credit score in the short term.

-       Length of your history matters.  Lenders care about the length of your credit history because they want to see that you can manage credit accounts responsibly over time. 

-       Finally: know that others view your credit.  Landlords, public utilities, and potential employers may review your credit history, in addition to lenders.

I always tell me clients: when it is time to apply for a loan, follow closely the instructions of you loan agent, and in doubt: ask the question.  They know best what the underwriter is going to scrutinize, what works and what does not work.

Do you have an input on the subject?  Please let me know.!

Thanks for reading.

Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A noteworthy local non-profit event:  Coalition on Homelessness, SF

Revoking a real estate counteroffer.

The life of a real estate purchase offer....

Sellers may be in a situation where they receive what they think is an acceptable offer, one that they wish to work with, and then proceed to counter that offer.  What happens if, prior to acceptance by the buyers, the sellers get another better offer.   Are the sellers trapped? 

No, the sellers may revoke that counteroffer, as long as it is done in due time.  The definition of "due time" and "properly done" can get technical, and a little too involved for this current blog.  If it is not explained carefully by your agent, and if it is not carefully documented, it can be a costly matter.

But the reason for this blog is not to explain the above, it is to stress that many buyers, (improperly informed by their agent), think they can take their time to respond up to the expiration of the time stated on the counteroffer. That period of time however can be cut short by a seller's revocation of their counteroffer prior to the buyers' acceptance and delivery.

Buyers should be aware that the clock is ticking on their response from the time they have received the counter offer, and that they may not have until the expiration to respond.  Buyers who are eager should, therefore, get their response back to the seller as soon as possible after they have received a counter offer - before any revocation can occur.

Hot markets create situations that agents do not usually encounter in slower markets.  It is important to have a knowledgeable agent on your side to keep you informed of your options, and pitfalls to avoid.  The decision is always the clients' to make in the end, but it is important to understand the rules of the game - and I prefer to say, it is important to precisely understand the language of the counteroffer that is given to you. This is where your agent can save you a lot.

Thank you for reading,

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Buying a home, second thoughts...

Many recent homebuyers would make different choices if they had a second chance, according to a study commissioned by JPMorgan Chase & Co.

New homeowners say they wish they had done more homework at the outset of their home search and purchase process.  Nine of every 10 buyers felt prepared when they bought their home, but in hindsight, 56% wish they were armed with more knowledge about the financial aspects of purchasing a home, such as the closing process (22%), making an offer and negotiating (19%) and financing (15%).

Many recent homebuyers were surprised by how long the home-buying process took:  40% say it took longer than they expected.  And while more than 80% of buyers had considered their home move-in ready, 76% have done or are planning to do renovations to their home in the near-term.

Two thirds of recent homebuyers sought advice from real estate agents, the study finds.

"While consumers said they felt prepared to buy a home and were satisfied with their home purchase, our results found that there are challenges and areas for improvement," says Lisa Foradori, chief marketing officer for Chase Mortgage Banking.

Many Realtors come from the teaching profession, and there is a good reason for that: to be a good agent, one needs to have a passion for explaining why and how things work during the buying (or selling) process.  And even when clients have bought real estate in the past, they need someone on their side who knows what has changed recently, both in the market place, and in the profession (new forms, new rules and laws, new tools).    I always advise my clients to work on their loan qualifications first: there are many choices involved in getting a loan, and choosing the right loan should not be an afterthought.

Thanks for reading!
Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Most parents make home buying decision around kids:

A recent survey by Coldwell Banker Real Estate found that 79% of Millennial parents (between 18 and 34) and 70% of Gen X parents (between 35 and 49) make major purchasing decisions around

their children, stating that they are more concerned about the immediate impact of a move on the emotional well-being of their children than whether moving is a good decision.

Francis

Silicon Valley real estate specialist
Detailed, local trends etc...
Current mortgage rates

Our next E-Waste & Shredding event is on:
Sat. Oct 25, 9am - 2pm (or until truck is full)
at: 161 S. San Antonio Rd
Los Altos, CA