First time homebuyers buying well into next year may still receive an $8,000 tax credit. Also, if you have lived in your home for 5 consecutive years of the last 8, you may qualify for a $6,500 tax credit for buying a new home! Send me your questions and I'll be happy to respond.
www.GaryNobile.com (408) 247-4029.
Friday, November 6, 2009
Wednesday, October 14, 2009
Silicon Valley Real Estate Market Update Video
Please see the following real estate market update video. It includes real estate sales, homes available for sale and pending sale information to help see local trends. It shows stats from June 2007 to October 2009. It includes single family homes in Santa Clara County including San Jose, Gilroy, Morgan Hill, Cupertino, Santa Clara, Saratoga, Mt. View, Sunnyvale, Campbell, Los Gatos, and Monte Soreno. Hope you find it helpful. Since this is the first one of a series I have planned, I would appreciate your feedback. Thanks!
http://www.utipu.com/app/invited/id/78f000b8
-Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
http://www.utipu.com/app/invited/id/78f000b8
-Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
Tuesday, October 6, 2009
Thanks for helping out Santa Clara Students!
Thanks for helping out Santa Clara Students!
I would like to take this opportunity to provide a special thanks to a few local companies who have helped out the schools in Santa Clara by allowing me to place posters at their place of business. The posters help promote the Santa Clara School Foundation’s 1st annual carnival being held October 16-18 at Millikin School in Santa Clara, near the corner of Benton and Kiely (see www.santaclaraschoolsfoundation.org ). When I approached these businesses and wasn’t talking about real estate for a change, they were a little surprised. But when I explained that all the profit generated from the carnival goes directly to helping provide scholarships and to fund various projects for the students in the community in which they operate, they were all for it! So let’s hear it for this list of “good citizens”:
· Vito's Trattoria (www.myvitos.com) Skyport Dr. off highway 87
· Diaz-Christians Tax Service (Benton and Scott)
· Tires Unlimited (El Camino & Monroe)
· Santa Clara City Hall Cafeteria
· Belano Coffee (Stevens Creek and Kiely)
· Country Inn (Mervyn's Plaza)
· One Hour Mart Cleaners (El Camino & Los Padres)
· Paul Dines of Edward jones Financial Advisors (Washington near Newhall)
Thank you all for your support! If you know of another Santa Clara business who would like to help out with displaying posters, please let me know. Hope to see you at the carnival! -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
Wednesday, September 30, 2009
Morgan Hill Real Estate – An Active Market.
Morgan Hill Real Estate – An Active Market.
This past week I wrote an offer on behalf of some clients I am working with on a home in Morgan Hill. It was bank owned and in need of some TLC. TLC can be an ambiguous term so here’s a description of what the home needed. The pool pump and filter system was removed, as was the furnace, as was the hood over the stove, as were the appliances, as was a toilet or two. And what else did this person take with them? The covers to the electrical outlets were also missing. That’s right. I recently bought a two switch cover plate for 89 cents at Orchard Supply and it included 4 screws. So the person that left this home was kinda upset wouldn’t you say? From talking to other agents about this home, they told me that it was a mortgage broker who was foreclosed upon. In case you didn’t know, it can be a criminal offense to destroy your property if you are being foreclosed. This home is in a neighborhood of million dollar homes and if you’re familiar with Morgan Hill, you know that buys you quite a bit.
Back to the deal. My clients offered 50% down and about $50k over a list price of $775k. But we did not get the home because we were outbid by an all cash offer for more money. The funny thing is, I still have people say to me, “but it’s a buyer’s market isn’t it?” To partially plagiarize a popular Oldsmobile commercial: This is not your father’s real estate market. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
This past week I wrote an offer on behalf of some clients I am working with on a home in Morgan Hill. It was bank owned and in need of some TLC. TLC can be an ambiguous term so here’s a description of what the home needed. The pool pump and filter system was removed, as was the furnace, as was the hood over the stove, as were the appliances, as was a toilet or two. And what else did this person take with them? The covers to the electrical outlets were also missing. That’s right. I recently bought a two switch cover plate for 89 cents at Orchard Supply and it included 4 screws. So the person that left this home was kinda upset wouldn’t you say? From talking to other agents about this home, they told me that it was a mortgage broker who was foreclosed upon. In case you didn’t know, it can be a criminal offense to destroy your property if you are being foreclosed. This home is in a neighborhood of million dollar homes and if you’re familiar with Morgan Hill, you know that buys you quite a bit.
Back to the deal. My clients offered 50% down and about $50k over a list price of $775k. But we did not get the home because we were outbid by an all cash offer for more money. The funny thing is, I still have people say to me, “but it’s a buyer’s market isn’t it?” To partially plagiarize a popular Oldsmobile commercial: This is not your father’s real estate market. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
Monday, September 28, 2009
Why Are Pending Sales Dropping?
Why Are Pending Sales in Santa Clara County Real Estate Dropping? First let’s look at the numbers. Active (for sale) single family homes in Santa Clara County have dropped from 2,200 to 2,100 this week while pending sales (sold, not yet closed escrow) have also dropped from 2,900 to 2,800. So what’s going on?
The answer is actually pretty simple. When you have more homes pending than active, sooner or later the pending sales actually close escrow. When they close escrow, the pending number goes down while the “sold” number rises. So don’t panic, there’s not another swing in the market. It’s the natural course following a market shift. The reality is that there is still an undersupply of homes on the market right now which is causing multiple offers on many properties. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
The answer is actually pretty simple. When you have more homes pending than active, sooner or later the pending sales actually close escrow. When they close escrow, the pending number goes down while the “sold” number rises. So don’t panic, there’s not another swing in the market. It’s the natural course following a market shift. The reality is that there is still an undersupply of homes on the market right now which is causing multiple offers on many properties. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
Monday, September 21, 2009
What’s in a Termite Report?
What’s in a Termite Report?
I recently marketed a home in Cupertino for a seller. As I typically do, I ordered a termite report before I put the home on the market so as to disclose to potential buyers (and the seller) any damaged wood the home may have. A termite report does more that discloses if a home has termites or other insects that destroy wood. It also outlines any dry rot that the inspector found during the course of his inspection. In addition, the report will explain any items found that, left untreated, may lead to dry rot. And lastly, the report will give a “heads up” as to other areas of the home that may need attention beyond dry rot and termites. Here’s a detailed explanation of each.
Current infestation or dry rot is referred to as “Section 1 finding”. Items that may lead to dry rot or heads up items are referred to as “Section 2 findings”. Sometimes there are areas that cannot be inspected because an inspector is unable to visually inspect the area. I often see this in areas such as the garage or attic where occupants of a home have a lot of stuff around preventing the inspector from getting a good view of potential damage. In these cases, the inspector will state “needs further inspection”. If you want to remove the stuff and have the inspector come back, be advised that there is a re-inspection fee.
Termites, beetles, etc. are a problem because they eat wood. Wood destroying organisms eating wood inside the walls and floors of your home causes the structure to weaken so it’s important to eradicate these pests. One could have termites under the home (subterranean) or above ground. Both can be effectively treated. Sometimes they can be treated locally (just within that area) but sometimes the home will need a fumigation. This is when there are termites that are either impossible to treat because they can’t be reached within the walls or there are just too many to economically treat in several local areas. If you’ve ever seen a big tent over a home for a few days, that’s what a fumigation looks like. The cost of fumigation varies depending on the size of the home. I find that a typical 1,500 sq. ft. home costs about $1,800 to fumigate if you prep the home yourself. If you want the termite company to prep it for you, that will cost about another $250. If you choose to fumigate, know that you must be out of the home for a minimum of 3 days. It’s kind of a pain to make sure your mattresses are protected and food is removed (along with other considerations) so I typically advise buyers and sellers to conduct a fumigation after the seller has moved all their stuff out and before the buyer has moved in. Other considerations are the fact that if you have a TV antenna on top of the home, it will have to be removed so the tent can go over the home, or it may be more difficult for the fumigators to fit the tent over the home.
Water is also a big destroyer of wood. Often times you’ll see in a termite report that there is a leaking shower or toilet that has damaged the floor underneath the linoleum, tile, or shower floor. A seller often has no idea this problem exists because most of the time you can only see the leak if you crawl under the home. Not many of us do that. In this case, the inspector will often recommend removing the floor covering (or shower pan) removing the damaged wood and replacing everything. They will quote you a cost for a “standard grade” replacement tile, linoleum, or shower pan. But if you want a specific grade and color of tile, it will cost you more. Buyers might consider this to be a good time to remodel a bathroom. Since you are into the floor anyway, it will cost you less to remodel it now that later when you have to remove the flooring, etc. You may be able to negotiate a better price or a concession from the seller for the damage found in the inspection
Sometimes an inspector finds areas that need attention, but go are beyond the scope of his inspection. For example, if he discovers potential deficiencies with the roof, roof gutters, foundation, water under the home, etc. he will recommend an appropriate inspection by someone who is licensed to inspect those areas. A roofer, for example, is not an expert in termites, and vice versa so it’s an appropriate suggestion for the inspector to make to help a potential buyer understand what they are buying. If you’re a seller, it’s important to understand what you are a selling and how a potential buyer might attempt to negotiate with you based on the true condition of the home. It’s fairly common for a homeowner I’m working with to have no knowledge of termites in their home, but to have an inspector see them in a variety of places. That’s why it’s important to have a reputable firm conduct your inspection. I prefer one that is not on commission to sell you repairs and one that has a long, strong track record of standing behind their work. For many years I’ve trusted Able Exterminators in San Jose [(408) 251-6500] and have been pleased with the results. There are other reputable firms as well. Do your research. I've run across so many quirky things in termite reports over the years that it's impossible to cover them all here so make sure you know what you're reading. It can have a big impact on your sale/purchase! For more info, please conact me. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
I recently marketed a home in Cupertino for a seller. As I typically do, I ordered a termite report before I put the home on the market so as to disclose to potential buyers (and the seller) any damaged wood the home may have. A termite report does more that discloses if a home has termites or other insects that destroy wood. It also outlines any dry rot that the inspector found during the course of his inspection. In addition, the report will explain any items found that, left untreated, may lead to dry rot. And lastly, the report will give a “heads up” as to other areas of the home that may need attention beyond dry rot and termites. Here’s a detailed explanation of each.
Current infestation or dry rot is referred to as “Section 1 finding”. Items that may lead to dry rot or heads up items are referred to as “Section 2 findings”. Sometimes there are areas that cannot be inspected because an inspector is unable to visually inspect the area. I often see this in areas such as the garage or attic where occupants of a home have a lot of stuff around preventing the inspector from getting a good view of potential damage. In these cases, the inspector will state “needs further inspection”. If you want to remove the stuff and have the inspector come back, be advised that there is a re-inspection fee.
Termites, beetles, etc. are a problem because they eat wood. Wood destroying organisms eating wood inside the walls and floors of your home causes the structure to weaken so it’s important to eradicate these pests. One could have termites under the home (subterranean) or above ground. Both can be effectively treated. Sometimes they can be treated locally (just within that area) but sometimes the home will need a fumigation. This is when there are termites that are either impossible to treat because they can’t be reached within the walls or there are just too many to economically treat in several local areas. If you’ve ever seen a big tent over a home for a few days, that’s what a fumigation looks like. The cost of fumigation varies depending on the size of the home. I find that a typical 1,500 sq. ft. home costs about $1,800 to fumigate if you prep the home yourself. If you want the termite company to prep it for you, that will cost about another $250. If you choose to fumigate, know that you must be out of the home for a minimum of 3 days. It’s kind of a pain to make sure your mattresses are protected and food is removed (along with other considerations) so I typically advise buyers and sellers to conduct a fumigation after the seller has moved all their stuff out and before the buyer has moved in. Other considerations are the fact that if you have a TV antenna on top of the home, it will have to be removed so the tent can go over the home, or it may be more difficult for the fumigators to fit the tent over the home.
Water is also a big destroyer of wood. Often times you’ll see in a termite report that there is a leaking shower or toilet that has damaged the floor underneath the linoleum, tile, or shower floor. A seller often has no idea this problem exists because most of the time you can only see the leak if you crawl under the home. Not many of us do that. In this case, the inspector will often recommend removing the floor covering (or shower pan) removing the damaged wood and replacing everything. They will quote you a cost for a “standard grade” replacement tile, linoleum, or shower pan. But if you want a specific grade and color of tile, it will cost you more. Buyers might consider this to be a good time to remodel a bathroom. Since you are into the floor anyway, it will cost you less to remodel it now that later when you have to remove the flooring, etc. You may be able to negotiate a better price or a concession from the seller for the damage found in the inspection
Sometimes an inspector finds areas that need attention, but go are beyond the scope of his inspection. For example, if he discovers potential deficiencies with the roof, roof gutters, foundation, water under the home, etc. he will recommend an appropriate inspection by someone who is licensed to inspect those areas. A roofer, for example, is not an expert in termites, and vice versa so it’s an appropriate suggestion for the inspector to make to help a potential buyer understand what they are buying. If you’re a seller, it’s important to understand what you are a selling and how a potential buyer might attempt to negotiate with you based on the true condition of the home. It’s fairly common for a homeowner I’m working with to have no knowledge of termites in their home, but to have an inspector see them in a variety of places. That’s why it’s important to have a reputable firm conduct your inspection. I prefer one that is not on commission to sell you repairs and one that has a long, strong track record of standing behind their work. For many years I’ve trusted Able Exterminators in San Jose [(408) 251-6500] and have been pleased with the results. There are other reputable firms as well. Do your research. I've run across so many quirky things in termite reports over the years that it's impossible to cover them all here so make sure you know what you're reading. It can have a big impact on your sale/purchase! For more info, please conact me. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
Tuesday, September 15, 2009
Is Your Home Community Property?
Is Your Home Community Property?
This is a popular topic that is often misunderstood. According to IRS Publication 555, community property is property acquired during your marriage while you are living in a community property state such as California. It can also be property you and your spouse have converted from separate property (this can happen unintentionally). And lastly, community property is property that cannot be identified as separate property. Sounds simple enough, but it can get complicated.
Community property can become of particular importance when a married couple is going through a divorce. It’s important to understand what’s hers and what’s his before agreeing to a Marriage Separation Agreement (MSA). When a couple agrees to an MSA it’s nearly impossible to change, even if it contains errors. One of the more typical questions divorcing couples ask is in regards to a home that one of them acquired before marriage. Is that home community property? It depends. If you have agreed to convert it to community property, then it is. Let’s assume you didn’t agree to convert the home. If during the course of your marriage you made house payments on that home from “community income”, then it is automatically converted to community property.
To clarify, here’s a typical scenario. Let’s suppose that your parents gave you a down payment on a home when you were single. You owned the home for a few years, gained more equity, then got married. You didn’t get a prenuptial agreement because you were going to be in love forever. For a few years you make the payments on that home from money you earn during the time you have been married. Guess what, that money you earned came from “community income”.
Congratulations, you may have just converted a portion your home to community property. Later, things don’t go so well with your spouse and you both decide to divorce. Part of your home is now legally community property that can be split between the two of you.
There has been a type of divorce gaining popularity over the years called Collaborative Divorce. It helps couples going through divorce look at what’s best for all and doing the right thing instead of one person trying to “win”. Divorcing spouses each have their own coach who is a licensed mental health professional. Each also has their own Collaborative Attorney who is highly trained in both mediation and collaboration. Certified financial and child specialists complete the team who all work together to help you split amicably.
While any couple can take advantage of this professional service, it’s particularly well suited for those with children because the split is conducted without the typical ex-bashing you see when divorcing couples go through traditional court systems. We all know the kids get hurt when that happens. Because Collaborative Divorce does not use the traditional court system, it is private and may keep divorcing couples’ property and concerns out of the public’s view. And if you’ve ever investigated the cost of litigation, you’ll find that Collaborative Divorce can be a significantly less expensive alternative. No wonder this service has gained so much popularity over the years.
To find out more about Collaborative Practice or to find a Collaborative Professional, visit www.cpcal.org, the non-profit California organization of Collaborative Professionals.
For a free copy of IRS divorce related publications, send me an e-mail through my website: www.GaryNobile.com. Please consult with your attorney or CPA before making any decisions regarding legal and tax matters. Gary Nobile is a full service Realtor serving Silicon Valley and has earned the designation “Real Estate Specialist – Divorce” from the California Association of Realtors, DRE #01068890, (408) 247-4029.
This is a popular topic that is often misunderstood. According to IRS Publication 555, community property is property acquired during your marriage while you are living in a community property state such as California. It can also be property you and your spouse have converted from separate property (this can happen unintentionally). And lastly, community property is property that cannot be identified as separate property. Sounds simple enough, but it can get complicated.
Community property can become of particular importance when a married couple is going through a divorce. It’s important to understand what’s hers and what’s his before agreeing to a Marriage Separation Agreement (MSA). When a couple agrees to an MSA it’s nearly impossible to change, even if it contains errors. One of the more typical questions divorcing couples ask is in regards to a home that one of them acquired before marriage. Is that home community property? It depends. If you have agreed to convert it to community property, then it is. Let’s assume you didn’t agree to convert the home. If during the course of your marriage you made house payments on that home from “community income”, then it is automatically converted to community property.
To clarify, here’s a typical scenario. Let’s suppose that your parents gave you a down payment on a home when you were single. You owned the home for a few years, gained more equity, then got married. You didn’t get a prenuptial agreement because you were going to be in love forever. For a few years you make the payments on that home from money you earn during the time you have been married. Guess what, that money you earned came from “community income”.
Congratulations, you may have just converted a portion your home to community property. Later, things don’t go so well with your spouse and you both decide to divorce. Part of your home is now legally community property that can be split between the two of you.
There has been a type of divorce gaining popularity over the years called Collaborative Divorce. It helps couples going through divorce look at what’s best for all and doing the right thing instead of one person trying to “win”. Divorcing spouses each have their own coach who is a licensed mental health professional. Each also has their own Collaborative Attorney who is highly trained in both mediation and collaboration. Certified financial and child specialists complete the team who all work together to help you split amicably.
While any couple can take advantage of this professional service, it’s particularly well suited for those with children because the split is conducted without the typical ex-bashing you see when divorcing couples go through traditional court systems. We all know the kids get hurt when that happens. Because Collaborative Divorce does not use the traditional court system, it is private and may keep divorcing couples’ property and concerns out of the public’s view. And if you’ve ever investigated the cost of litigation, you’ll find that Collaborative Divorce can be a significantly less expensive alternative. No wonder this service has gained so much popularity over the years.
To find out more about Collaborative Practice or to find a Collaborative Professional, visit www.cpcal.org, the non-profit California organization of Collaborative Professionals.
For a free copy of IRS divorce related publications, send me an e-mail through my website: www.GaryNobile.com. Please consult with your attorney or CPA before making any decisions regarding legal and tax matters. Gary Nobile is a full service Realtor serving Silicon Valley and has earned the designation “Real Estate Specialist – Divorce” from the California Association of Realtors, DRE #01068890, (408) 247-4029.
Friday, September 11, 2009
Who's Performaing at Santa Clara Art and Wine Festival
Santa Clara Art and Wine Festival – September 19-20. The Santa Clara Art and Wine Festival is here again and it’s always a lot of fun! Back again this year is The Joe Sharino Band who will be performing on Sunday afternoon in the main Central Park Arena. Joe and his band always put on a terrific show that’s sure to get people dancing and having a great time. For a complete list of events, go to www.santaclaraartandwinefestival.com. This year especially, I think it’s important that we all find a way to go out and have a little fun. It’s free to attend, the food is wonderful, the people are great, and all money generated through concessions goes to local charities. One such charity is the Santa Clara Schools Foundation (SCSF). This foundation has existed for about 20 years and its sole capacity is to raise money to give to local schools for things not funded publicly. For example, many scholarships have been awarded over the years by this organization and many other local companies. But this foundation is one that local educators have come to rely upon when they are in need of something that isn’t budgeted elsewhere. Things like allowing the opportunity for an underprivileged Santa Clara student to attend a field trip or a camp. Things like projectors that teachers need to assist in teaching the students. It’s really too long of a list to explain here. But what I found very special about this foundation is that it is made up entirely of volunteers who not only donate their time, effort and energy to this organization, but also their money. Nobody asks for anything in return. And every dollar spent goes to helping the students of Santa Clara become better educated and well rounded. The foundation has a new website: santaclaraschoolsfoundation.org that explains what they do and how they do it. You can even donate if you like. As you may know, I have a soft spot in my heart for the kids attending Santa Clara schools because I happen to be a product of that school system. I think I turned out OK (but there are probably some detractors out there). Over the years, I’ve been called upon by educators to speak to students at various grade levels in their classrooms about a variety of subjects ranging from real estate to personal finances to simply read a story to elementary kids. It’s something I really enjoy doing and am always willing to carve out time to help where I can. Since learning about the SCSF foundation, I became so excited about finding another way to help our local kids that I also volunteered for this organization. SCSF will have a booth at the Art and Wine Festival. So guess where you’ll find me... I’ve volunteered to pour wine at the SCSF booth on Saturday, September 19 from noon to 2:00. Please stop by and say hello! Cheers. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
Thursday, September 10, 2009
What Should You Disclose if Someone Dies in a Home?
What should You Disclose if Someone Dies in a Home? I just listed a home for sale in Cupertino that fell into this category which causes me to think about sharing it with you. This can be a touchy, little understood subject. Generally, I don’t like to give disclaimers because it sounds like I don’t know what I’m talking about, but my legal team says I must, so here goes. If in doubt about what you should disclose when selling a home or how to handle the estate of a deceased, please consult your attorney. OK, that’s out of the way, I hope they’re happy. Now let’s go on to the discussion at hand. If you are selling a home, you must disclose if a person has passed away inside of the home if it occurred within the past 3 years. If someone passed away and it’s been longer than 3 years, you don’t have to disclose it, but you can’t lie about it either. Here’s what I mean. You don’t have to tell a potential buyer in writing or verbally that someone passed away in the home if it’s been longer than 3 years, but if a buyer or a buyer’s representative asks you the question directly if a death has ever occurred in the home, you must tell the truth. Why is 3 years the magic threshold? Maybe the congressman who wrote the bill was spooked by ghost for 3 years before she went away (I really have no idea). There are plenty of other types of disclosures that may change depending upon if a seller inherited the property and if she/he lived in the home.
Here’s one scenario that I run into fairly often. Someone passes away inside of a home. That person had the foresight to create a trust and identify another person as a trustee. A trustee is someone who is given the responsibility to carry out the wishes of the deceased. Typically, the deceased will choose someone they trust a great deal to disposition their assets upon death. Using a trust and identifying a trustee typically avoids fighting amongst the heirs (often children) as to who should do what. When the dollars are large, the emotions and temptation are great. Regrettably, I’ve seen arguments occur amongst family members of my clients in this situation. So let’s say that someone passes away and asks her best friend to be a trustee. Let’s assume that’s you. You, the trustee, must sell the home per your friend’s wishes. As your Realtor, I would first need a copy of the trust. I would run it by my title company’s legal department to ensure that everything is legal and that you have legal authority to sell the home. I have had occurrences where additional documents needed to be prepared and notarized before the trustee could legally sell a home even when a trust was in place. Could you imagine buying a home only to learn later that the seller didn’t have legal authority to sell? Most of the time the deal wouldn’t close escrow because the title company would catch the problem during the closing process. But it would still create a lot of frustration, to say the least. Moving on, let’s further assume that you did not live in the home with the deceased. Because you have no firsthand knowledge about the home, you have limited disclosure requirements. Typically a seller must disclose everything they know about the home’s condition that would have a material impact on the buyer’s decision to buy. But since you haven’t lived in the home, these are things you might not know. Such as how old the roof is, if the plumbing has ever had a problem, etc. What you do have to disclose in writing is a form called “Supplemental Statutory and Contractual Disclosures”. In this document is where you are asked if someone had died in the home within the past three years. You’re also asked if you have knowledge about a few other items. One of these items you must respond to is regarding major defects in the property. Here’s where you need to be very careful. Even though you may not have lived in the home, if you have knowledge of a defect in the home, you must disclose it to a potential buyer! Just because you didn’t live in the home does not let you off the hook from disclosure if you know about the issue. When in doubt, disclose, disclose, disclose. What we are really talking about here is legally protecting yourself. So many people are concerned about getting a tad less money for the home if they mention everything they know that is wrong with the property. One lawsuit can wipe out those few extra dollars and a lot more. Another disclosure you will need to make is called “Hazards Disclosure Acknowledgment and Addendum”. This is where you will disclose if you have knowledge that the home has lead based paint. Most people don’t know and it’s OK to say you don’t know. You will also need to disclose “Water Heater Compliance”. This tells a potential buyer whether or not the water heater has been strapped to the wall to prevent tipping over during an earthquake. As the seller, you (the trustee) must ensure that the water heater is strapped before you close escrow and transfer title to the new buyer. In California, it’s the law. It’s cheap so don’t worry too much about it if your water heater isn’t strapped on the home you’re selling. My clients often ask me if they have to bring the water heater installation up to the current code which can into several hundred dollars depending upon how it was originally installed. That’s not required, only that it is strapped to the wall. A buyer may request that you bring it up to code, but that’s a negotiable item and you are not required to do so. You will also need to provide to the potential buyer an Environmental and Geological Report. As your agent, I would order these for you. As your agent I am also required to prepare another set of disclosures to present to a potential buyer that is more involved than a traditional sale, but that’s not something you’ll need to worry about. One more disclosure I’d encourage you to provide, though it’s not required, is a disclosure saying that it’s the buyer’s responsibility to verify any building permits. Sometimes people add on to their home. Sometimes they get permits, sometimes they don’t. Sometimes a great looking addition was not constructed with permits. By completing a disclosure like this, it puts the liability on the buyer to search for permits. This provides you, the trustee seller, with a layer of insulation above and beyond what you may not know. Being a trustee and selling the home of a friend is one of those things you hope you really never have to do. But if you do, please know that the deceased has put a great deal of trust in you. Congratulations. That person thought very highly of you and can pay you no higher a compliment. For specific questions, please contact me. -Gary Nobile, Realtor (408) 247-4029 http://www.garynobile.com
Here’s one scenario that I run into fairly often. Someone passes away inside of a home. That person had the foresight to create a trust and identify another person as a trustee. A trustee is someone who is given the responsibility to carry out the wishes of the deceased. Typically, the deceased will choose someone they trust a great deal to disposition their assets upon death. Using a trust and identifying a trustee typically avoids fighting amongst the heirs (often children) as to who should do what. When the dollars are large, the emotions and temptation are great. Regrettably, I’ve seen arguments occur amongst family members of my clients in this situation. So let’s say that someone passes away and asks her best friend to be a trustee. Let’s assume that’s you. You, the trustee, must sell the home per your friend’s wishes. As your Realtor, I would first need a copy of the trust. I would run it by my title company’s legal department to ensure that everything is legal and that you have legal authority to sell the home. I have had occurrences where additional documents needed to be prepared and notarized before the trustee could legally sell a home even when a trust was in place. Could you imagine buying a home only to learn later that the seller didn’t have legal authority to sell? Most of the time the deal wouldn’t close escrow because the title company would catch the problem during the closing process. But it would still create a lot of frustration, to say the least. Moving on, let’s further assume that you did not live in the home with the deceased. Because you have no firsthand knowledge about the home, you have limited disclosure requirements. Typically a seller must disclose everything they know about the home’s condition that would have a material impact on the buyer’s decision to buy. But since you haven’t lived in the home, these are things you might not know. Such as how old the roof is, if the plumbing has ever had a problem, etc. What you do have to disclose in writing is a form called “Supplemental Statutory and Contractual Disclosures”. In this document is where you are asked if someone had died in the home within the past three years. You’re also asked if you have knowledge about a few other items. One of these items you must respond to is regarding major defects in the property. Here’s where you need to be very careful. Even though you may not have lived in the home, if you have knowledge of a defect in the home, you must disclose it to a potential buyer! Just because you didn’t live in the home does not let you off the hook from disclosure if you know about the issue. When in doubt, disclose, disclose, disclose. What we are really talking about here is legally protecting yourself. So many people are concerned about getting a tad less money for the home if they mention everything they know that is wrong with the property. One lawsuit can wipe out those few extra dollars and a lot more. Another disclosure you will need to make is called “Hazards Disclosure Acknowledgment and Addendum”. This is where you will disclose if you have knowledge that the home has lead based paint. Most people don’t know and it’s OK to say you don’t know. You will also need to disclose “Water Heater Compliance”. This tells a potential buyer whether or not the water heater has been strapped to the wall to prevent tipping over during an earthquake. As the seller, you (the trustee) must ensure that the water heater is strapped before you close escrow and transfer title to the new buyer. In California, it’s the law. It’s cheap so don’t worry too much about it if your water heater isn’t strapped on the home you’re selling. My clients often ask me if they have to bring the water heater installation up to the current code which can into several hundred dollars depending upon how it was originally installed. That’s not required, only that it is strapped to the wall. A buyer may request that you bring it up to code, but that’s a negotiable item and you are not required to do so. You will also need to provide to the potential buyer an Environmental and Geological Report. As your agent, I would order these for you. As your agent I am also required to prepare another set of disclosures to present to a potential buyer that is more involved than a traditional sale, but that’s not something you’ll need to worry about. One more disclosure I’d encourage you to provide, though it’s not required, is a disclosure saying that it’s the buyer’s responsibility to verify any building permits. Sometimes people add on to their home. Sometimes they get permits, sometimes they don’t. Sometimes a great looking addition was not constructed with permits. By completing a disclosure like this, it puts the liability on the buyer to search for permits. This provides you, the trustee seller, with a layer of insulation above and beyond what you may not know. Being a trustee and selling the home of a friend is one of those things you hope you really never have to do. But if you do, please know that the deceased has put a great deal of trust in you. Congratulations. That person thought very highly of you and can pay you no higher a compliment. For specific questions, please contact me. -Gary Nobile, Realtor (408) 247-4029 http://www.garynobile.com
Tuesday, September 8, 2009
Interest Rate Changes Can Be Costly.
Interest Rate Changes Can Be Costly. I was recently sitting down with a client and we were strategizing about different scenarios that could help them get the most amount of home for their money. As I mentioned the other day in this blog, interest rates recently took a surprising drop. So we calculated how much money these buyers would save or how much it would cost them if rates go back up again. For a $500,000 mortgage at 4.875% (30 year fixed), their monthly mortgage would be $2,646. If the rate goes up to 5.875%, their monthly payment would go up to $2,958. That one percentage point in interest rate would cost/save them 12% on their monthly mortgage. With the amount of money the Fed has pumped into the economy, I would not be surprised to see 6.25% mortgage rates within 12 months to head off runaway inflation (just my opinion). Let’s look at what that would do to this buyer’s monthly payment. It would cost them $3,079 a month. That’s a 16% increase from today. We know we’ve already hit bottom in terms of prices in this area. Here’s my point. Some buyers are still waiting to buy. From this point forward, I believe waiting will come with a cost. If you know me at all, you know that I don’t typically go around spreading wild predictions just to cause people to do something I want them to do. Actually, it’s quite the opposite. I feel a sense of obligation to anyone who accepts my advice and I don’t take that level of trust lightly. That’s why I don’t make these kinds of predictions unless I have a factual sense of cause and effect. If there’s someone you know who’s been waiting to buy, please share this with them. . Or if you prefer, I can sit down with them and go through the details. Two years from now they will thank you for it. -Gary Nobile, Realtor (408) 247-4029 http://www.garynobile.com/
Friday, September 4, 2009
Deciphering Today’s Real Estate is on TV Tomorrow
Deciphering Today’s Real Estate is on TV Tomorrow. Saturday September 5th at 5:30 p.m., I will be interviewed on a public service TV station for their Spotlight on Real Estate segment. It will air on Comcast Channel 15 in San Jose and Campbell. It will also be streamed from www.creatvsj.org (log in early in case you need to download software to see it). I will asked to discuss today’s real estate market conditions along with a brief two year history of real estate in Silicon Valley. The segment I’m featured in is at the beginning of the program and will last about 10 minutes. I’ve prepared a nice graphic for those of you who are more visual in nature to help make it easier to understand today’s market. Hope you enjoy the program and I’d be happy to answer any follow up questions you may have about the information presented. -Gary Nobile, Realtor (408) 247-4029 www.GaryNobile.com
Thursday, September 3, 2009
Mortgage Rates Drop
Mortgage Rates Drop. At our weekly sales meetings, we cover various topics. One of them is interest rates. While most have predicted that interest rates will rise within the next 12 months, we were pleasantly surprised to learn rates had dropped this week. We are again seeing some fixed mortgages in the 4.875% range. Jumbo loans are in the low 6% range. Not coincidentally, we polled agents in the meeting and 12 agents were involved with multiple offers last week. Some deals had 2 offers, some had as many as 15. The number of Pending Sales of single family homes in Santa Clara County is at approximately 2,800 while homes for sale are down again to approximately 2,200. The trend certainly seems to be continuing that there are more buyers than sellers. (408) 247-4029 www.GaryNobile.com
Monday, August 31, 2009
New Homes at Modern Ice, Very Nice.
New Homes at Modern Ice, Very Nice. I’ve been working with several buyers in the San Jose area in the $400,000 price range who have been looking for a foreclosed home to buy. Since the market has heated up in that market segment, some have decided to take a look at a new townhome complex in San Jose called Modern Ice. It’s located off of Highway 101 and 13th Street, not too far from downtown. What a pleasant surprise. As opposed to some of the smelly fixers we’ve been looking at (I’m not being funny here) these homes were beautiful. The architect certainly made excellent use of the floor plan. Sometimes you walk into a 1,500 square foot home and wonder where they put the rest of the house and other times you think they forgot to measure one of the rooms because it feels so big. These homes are spacious and give you a feeling of privacy. They seem to be very well insulated. We even tested one of the homes by turning up a CD player to play loud in the home next door. We didn’t hear a peep in the home my clients were interested in. The home my clients ending up putting their offer in came with an upgraded tile entryway, hardwood floors, granite slab counters, stainless steel sinks, stainless steel appliances, stone bathroom sinks and stone shower walls, We were also able to negotiate for the seller to give the buyers cash credits that they were able to use at the design center to customize their home with upgrades of their choice. These homes also have attached 2 car tandem garages with extra storage space. Considering all the other choices in this price range, these homes presented a good value for the money. You may have heard that there is $10,000 tax credit incenctive to buy a new home in California (thank you Arnold). While the state aggressively set a budget of $100 million for these homes, it has already been used up by first time home buyers. However, first time home buyers can still take advantage of the $8,000 federal tax credit (see previous blog for details) until the end of November 2009, so don't wait. Modern Ice is now building their next phase and move in times are relatively short. If you’d like more info, please contact me. (408) 247-4029 www.GaryNobile.com
Saturday, August 29, 2009
Is History Repeating Itself?
Is History Repeating Itself? A friend of mine recently asked me about historical home price appreciation in California. Since I’m a member of the California Association of Realtors and National Association of Realtors, this data was readily available to me. For all the money I pay these associations every year, that’s the least they can do! Anyway, looking back to 1968, the median home price in California was a whopping $23,210. Compare that to 2008 where it was $346,410. Here’s where it starts to get interesting. When I started looking at year over year appreciation during that time, California typically mirrored national trends. But the degree of appreciation (or depreciation) was magnified in California vs. the rest of the country. For example, in 1977 home appreciation for the entire country was 12.6 % but in California it was 28.1 %. In 1992 when the country’s appreciation rate slowed to 2.7 %, California was depreciating to the tune of -1.8 %. In 2002, the country’s appreciation rate was 7.0 %, while California experienced a 20.5 % rate. In 2008, the country’s appreciation (in this case depreciation) rate was -9.8 %, while California experienced a painful -38.2 %. But as we are starting to turn the corner, one has to wonder, will history repeat itself? Will California’s appreciation rate clearly outpace the rest of the country? I believe that Californians will keep the cycle going. Bear with me here on the thought process. When things don’t go well, we’re so educated that we try to be smarter than the market and bail out quickly causing precipitous drops. But when things go well, we’re an optimistic bunch and aren’t afraid to jump on the bandwagon. For better or for worse, I expect this trend to continue.
(408) 247-4029 www.GaryNobile.com
(408) 247-4029 www.GaryNobile.com
Tuesday, August 25, 2009
Client Party - Thank You
Just wanted to say thanks to those of you who showed up at my Music in the Park client party last Thursday night. The music was great and the band (Sage) kept the fun going until dusk! This was my 3rd annual party for my clients at this venue and it was all we expected it to be. Last year, regrettably, I has was recovering from a broken ankle and couldn't host this party. It's hard to carry an ice chest full of wine on crutches! When you miss a year, one never knows if the momentum will carry over to the following year. But Thursday everyone showed up and brought their party attitudes. Sometimes when life gets hard and pressure mounts, it's good to be around other positive people to just relax and enjoy your self. Perhaps even dance a little! It was a friendly family atmosphere and it seemed that everyone had a wonderful time. Even though I had to get there at noon to reserve the "prime spot" for us, it was all worth it. Thanks for making it another special event!
www.GaryNobile.com
www.GaryNobile.com
Monday, August 17, 2009
Top Realtors Share The Secrets of Their Markets.
Top Realtors Share The Secrets of Their Markets.
I’m back after attending a real estate conference in San Diego with many of the top Realtors in the country. It was interesting to learn that many of them have experienced exactly what we have experienced here. They, along with the organization’s leader Brian Buffini, have shared with me that the real estate market bottomed out 3 months ago. In many parts of the country, Realtors are dealing with multiple offers on residential properties. They also mentioned that the media in their areas haven’t quite caught on to this trend which confuses their clients (I can attest to this). The buyers we are working with hear the media say that the market is terrible and you should be able to undercut any listed price. However, in reality buyers are often bidding over list price to get the home they want. These agents also explained that there is just not enough inventory of homes for sale in many areas of the country. When I asked about the next wave of upcoming foreclosures and why we haven’t seen them hit the market, they said that banks are slow rolling them. I’ve heard a range of opinions as to why this is this is happening. Honestly, I don’t know for sure what’s fact and what’s conjecture, but here’s what the agents I spoke to said:
· Banks don’t want to overload the market like they did last time and cause prices to drop again
· Banks want to make the Obama administration look good by showing improvement in the market
· Investor groups are buying up 50-60 homes at a time at a steep discount directly from the banks so they never hit the market
· 5/1 ARMs that were scheduled to adjust to higher payments this year have adjusted to very low interest rates that home owners can still afford
The comment about the Obama administration sounded like a bit if a stretch to me, but one never knows. After all the banks did get (gulp) billions of our money. Oh, by the way, San Diego was a lot of fun. I went to Pacific Beach for a bicycle ride, La Jolla for some body surfing, and to Coronado Island beach for some boogie boarding. Not a bad way to spend some “down time”. But now I’m to back to reality so if you know of someone interested in selling their home, please give me a call, I’d love to share this information with them. (408) 247-4029 www.GaryNobile.com
I’m back after attending a real estate conference in San Diego with many of the top Realtors in the country. It was interesting to learn that many of them have experienced exactly what we have experienced here. They, along with the organization’s leader Brian Buffini, have shared with me that the real estate market bottomed out 3 months ago. In many parts of the country, Realtors are dealing with multiple offers on residential properties. They also mentioned that the media in their areas haven’t quite caught on to this trend which confuses their clients (I can attest to this). The buyers we are working with hear the media say that the market is terrible and you should be able to undercut any listed price. However, in reality buyers are often bidding over list price to get the home they want. These agents also explained that there is just not enough inventory of homes for sale in many areas of the country. When I asked about the next wave of upcoming foreclosures and why we haven’t seen them hit the market, they said that banks are slow rolling them. I’ve heard a range of opinions as to why this is this is happening. Honestly, I don’t know for sure what’s fact and what’s conjecture, but here’s what the agents I spoke to said:
· Banks don’t want to overload the market like they did last time and cause prices to drop again
· Banks want to make the Obama administration look good by showing improvement in the market
· Investor groups are buying up 50-60 homes at a time at a steep discount directly from the banks so they never hit the market
· 5/1 ARMs that were scheduled to adjust to higher payments this year have adjusted to very low interest rates that home owners can still afford
The comment about the Obama administration sounded like a bit if a stretch to me, but one never knows. After all the banks did get (gulp) billions of our money. Oh, by the way, San Diego was a lot of fun. I went to Pacific Beach for a bicycle ride, La Jolla for some body surfing, and to Coronado Island beach for some boogie boarding. Not a bad way to spend some “down time”. But now I’m to back to reality so if you know of someone interested in selling their home, please give me a call, I’d love to share this information with them. (408) 247-4029 www.GaryNobile.com
Monday, August 3, 2009
Real Estate Shift Leaves Buyers In First Gear
Real Estate Shift Leaves Buyers In First Gear.
The Silicon Valley real estate market has kicked it up a notch. As I’ve been reporting for several months now, inventory of homes for sale have been shrinking while sales have been increasing. It’s been challenging for buyers to get the homes they want because there are multiple offers on many homes. For perspective, I thought it would be good to get a quantitative historical perspective for single family homes (see chart below). In June of ’07 is when banks first started to trim automatic loan approvals. This was the beginning of the end for “Liar’s Loans”. By this time, inventory was inflating because prices were overinflated. I would like to interject a little known fact here: Total sales for all of 2007 were 9,022 which was the lowest level in Silicon Valley since 1993.
By June ’08 foreclosures had ensued and were starting to hit the market in a flood, if you will, causing inventory to grow and prices to drop. It’s interesting to note that sales stayed somewhat steady during June ‘08 compared to June ’07, remaining at historical lows.
Along comes June 2009. Inventory is down 33% from 2008 and below the June 2007 levels while sales increased by 28%. This has caught many buyers off guard. We all know that when inventory (supply) decreases and demand (sales) increases, prices rise. Just think if there was only one milkshake left on the planet and you wanted it. If you think about how much you’d be willing to pay for it, you understand supply and demand along with the impact on prices. Along comes July 2009 and things really start getting interesting. Supply drops another 32%. But where did all the homes go? One of the missteps about looking at real estate data is only looking at sales. It’s a good indicator of what has happened, but not such a good indicator as to what is happening right now. For that, I look at pending sales. These are sales where a buyer and seller have agreed in writing to the terms of the sale, but it hasn’t yet closed. The last time I researched it, about 95% of pending sales actually close. The others go back on the market. This figure changes from time to time depending on the intensity of the market. I find that when prices are rising, more buyers close the sale because they have made money while waiting for the home to close and, thus, they’re less reluctant to walk away from a deal and start all over again at a higher price. So let’s look at the magic number today. Pending sales are up 149% from June 2009! This has caught many buyers wondering what happened and why they can’t they get the home they want. It can be frustrating, but hang in there. If you know what you’re dealing with and set appropriate expectations, you can understand the market and keep your sanity. http://www.garynobile.com/ (408) 247-4029
For Sale (Supply)
June '07 - 4,508 homes
June '08 - 6,089 homes
June '09 - 4,154 homes
July '09 - 2,790 homes
Sold (Demand)
June '07 - 982 homes
June '08 - 931 homes
June '09 - 1,191 homes
July '09 - 2,964 homes
The Silicon Valley real estate market has kicked it up a notch. As I’ve been reporting for several months now, inventory of homes for sale have been shrinking while sales have been increasing. It’s been challenging for buyers to get the homes they want because there are multiple offers on many homes. For perspective, I thought it would be good to get a quantitative historical perspective for single family homes (see chart below). In June of ’07 is when banks first started to trim automatic loan approvals. This was the beginning of the end for “Liar’s Loans”. By this time, inventory was inflating because prices were overinflated. I would like to interject a little known fact here: Total sales for all of 2007 were 9,022 which was the lowest level in Silicon Valley since 1993.
By June ’08 foreclosures had ensued and were starting to hit the market in a flood, if you will, causing inventory to grow and prices to drop. It’s interesting to note that sales stayed somewhat steady during June ‘08 compared to June ’07, remaining at historical lows.
Along comes June 2009. Inventory is down 33% from 2008 and below the June 2007 levels while sales increased by 28%. This has caught many buyers off guard. We all know that when inventory (supply) decreases and demand (sales) increases, prices rise. Just think if there was only one milkshake left on the planet and you wanted it. If you think about how much you’d be willing to pay for it, you understand supply and demand along with the impact on prices. Along comes July 2009 and things really start getting interesting. Supply drops another 32%. But where did all the homes go? One of the missteps about looking at real estate data is only looking at sales. It’s a good indicator of what has happened, but not such a good indicator as to what is happening right now. For that, I look at pending sales. These are sales where a buyer and seller have agreed in writing to the terms of the sale, but it hasn’t yet closed. The last time I researched it, about 95% of pending sales actually close. The others go back on the market. This figure changes from time to time depending on the intensity of the market. I find that when prices are rising, more buyers close the sale because they have made money while waiting for the home to close and, thus, they’re less reluctant to walk away from a deal and start all over again at a higher price. So let’s look at the magic number today. Pending sales are up 149% from June 2009! This has caught many buyers wondering what happened and why they can’t they get the home they want. It can be frustrating, but hang in there. If you know what you’re dealing with and set appropriate expectations, you can understand the market and keep your sanity. http://www.garynobile.com/ (408) 247-4029
For Sale (Supply)
June '07 - 4,508 homes
June '08 - 6,089 homes
June '09 - 4,154 homes
July '09 - 2,790 homes
Sold (Demand)
June '07 - 982 homes
June '08 - 931 homes
June '09 - 1,191 homes
July '09 - 2,964 homes
Wednesday, July 29, 2009
Multiple Offers Now the Norm in Silicon Valley Real Estate
Multiple Offers Now the Norm in Silicon Valley Real Estate.
In Silicon Valley real estate, there are more buyers than sellers right now. I know, it’s hard to believe. The news says we’re going to hell in a hand basket. There are foreclosures all around us. But the reality is that it’s a seller’s market. I’ve been working with a very nice young couple who are looking to buy their first a condo and can pay all cash (don’t ask). We’ve been outbid twice in the past two weeks. We were not asking for an appraisal contingency and were offering a free rent back so the seller could have some extra time finding a new home. Sorry, not good enough. We were out bid by an investor who gave the seller up to eight months to rent the place. That knocked us out of contention. It’s frustrating for the buyers who are looking for a home to live in. It’s even more frustrating for them because they keep hearing that they shouldn’t be paying full price for a home and to negotiate a better price. Sometimes I have to share with clients that the press info is typically 3 months old. Today for instance, the local paper reported that real estate prices in June 2009 are up. Well, it’s almost August, but I suppose better late than never. I’m on the frontlines every day and know the market, then inventory and the latest trends. But clients have difficulty reconciling between all the news from CNN, Wall Street Journal, the local papers and little ‘ol Gary Nobile. In a way, I can’t blame them. These media outlets spend millions researching, investigating and reporting through all the major channels. Here I am with my blog that doesn’t even charge me to post. The others have hundreds of reporters. Uh, I guess it’s just me reporting (not including the 150 other agents I talk to every week to gauge the market). But the one thing that is very hard for any news agency to do effectively is to consistently report on a niche local market like San Jose real estate. No one could report on your profession better than you, right? If you like what you see here, post a comment. If you’re CNN or The Wall Street Journal, perhaps you should subscribe to this post. Good news or bad, I’ll always share accurate data. www.GaryNobile.com
In Silicon Valley real estate, there are more buyers than sellers right now. I know, it’s hard to believe. The news says we’re going to hell in a hand basket. There are foreclosures all around us. But the reality is that it’s a seller’s market. I’ve been working with a very nice young couple who are looking to buy their first a condo and can pay all cash (don’t ask). We’ve been outbid twice in the past two weeks. We were not asking for an appraisal contingency and were offering a free rent back so the seller could have some extra time finding a new home. Sorry, not good enough. We were out bid by an investor who gave the seller up to eight months to rent the place. That knocked us out of contention. It’s frustrating for the buyers who are looking for a home to live in. It’s even more frustrating for them because they keep hearing that they shouldn’t be paying full price for a home and to negotiate a better price. Sometimes I have to share with clients that the press info is typically 3 months old. Today for instance, the local paper reported that real estate prices in June 2009 are up. Well, it’s almost August, but I suppose better late than never. I’m on the frontlines every day and know the market, then inventory and the latest trends. But clients have difficulty reconciling between all the news from CNN, Wall Street Journal, the local papers and little ‘ol Gary Nobile. In a way, I can’t blame them. These media outlets spend millions researching, investigating and reporting through all the major channels. Here I am with my blog that doesn’t even charge me to post. The others have hundreds of reporters. Uh, I guess it’s just me reporting (not including the 150 other agents I talk to every week to gauge the market). But the one thing that is very hard for any news agency to do effectively is to consistently report on a niche local market like San Jose real estate. No one could report on your profession better than you, right? If you like what you see here, post a comment. If you’re CNN or The Wall Street Journal, perhaps you should subscribe to this post. Good news or bad, I’ll always share accurate data. www.GaryNobile.com
Monday, July 27, 2009
Cher’s Malibu Mansion on the Market, Price Reduced
Cher’s Malibu Mansion is back on the Market, Price Reduced. Extending approximately 1.7 acres and overlooking the Pacific Ocean, the three-story, 14,000-square-foot beach estate comes complete with six bedrooms, seven bathrooms, a theater, a gym, multiple verandas, a tennis court and a pool. Not bad for a gal that got started singing “I Got You Babe”.
The home, which she built in 1992, used to house her collection of English Gothic Revival antiques, which she auctioned off about three years ago. Personally, I think keeping them would have added to the mystique of the home. She might have considered offering a package deal to include them as personal property. It certainly could have caused more buyers to come in and take a look. Then again, I suppose not every beach estate buyer appreciates the whole Goth thing.
The home, which she built in 1992, used to house her collection of English Gothic Revival antiques, which she auctioned off about three years ago. Personally, I think keeping them would have added to the mystique of the home. She might have considered offering a package deal to include them as personal property. It certainly could have caused more buyers to come in and take a look. Then again, I suppose not every beach estate buyer appreciates the whole Goth thing.
According to the Mercury News, last year Cher had this beach palace listed for $45 million. Apparently, there were no takers so she remodeled and dropped the price to $41 million. Sounds like a steal to me, but then again, Cher won’t be roughing it anytime soon.
In 2006, she bought a condo in Los Angeles and that same year sold a bayfront house in Key Biscayne, Florida, for $8.8 million, just before the collapse of the Florida condo market. Looks like Donald Trump has some competition. Oh, and in case you weren't sure, that's her place atop the bluff. www.GaryNobile.com
In 2006, she bought a condo in Los Angeles and that same year sold a bayfront house in Key Biscayne, Florida, for $8.8 million, just before the collapse of the Florida condo market. Looks like Donald Trump has some competition. Oh, and in case you weren't sure, that's her place atop the bluff. www.GaryNobile.com
Wednesday, July 22, 2009
Depreciation: One of Real Estate's Most Powerful Weapons
Depreciation: One of Real Estate's Most Powerful Weapons.
Of all the benefits of owning investment real estate, one of the least understood is the benefit of depreciation. Depreciation is a method for matching the costs of acquiring property over the property's estimated economic life. The IRS requires that most property be depreciated via the ‘straightline’ depreciation method. Using the straightline method, residential income properties are depreciated over 27.5 years. Commercial property is depreciated over 39 years. Depreciation Calculations: It is important to note that land is not depreciable. In order to properly calculate depreciation, the value of land must be excluded. For example, a $1MM duplex with land worth $300,000 has $700,000 worth of depreciable real estate.Using the straightline depreciation method, the annual depreciation amount is approximately $25,500 ($700,000/27.5) NOTE: The IRS will typically not challenge the assessment of the land value if it reasonable. A tax advisor, attorney or real estate agent should be able to provide guidance for what is reasonable based on the location and type of land.Depreciation BenefitsDeprecation is an ‘intangible expense’ that will reduce the reportable taxable income from the property. This is good, because the end result is more money in your pocket and less tax to the IRS. Here’s how it works: Assume that the yearly rental income from the example duplex is $36,000. At the end of the year, this will have to be reported to the IRS. However, the IRS does not tax the entire $36,000. The taxable income from the property is calculated as follows:Rental Income(Less Expenses) (less Deprecation) = Taxable Rental Income. If the expenses of operating and managing the duplex are $5,000 for the year, the taxable rental income is calculated as follows: Rental Income $36,000 (less Expenses, $5,000) (less Deprecation, $25,500 = Taxable Rental Income $5,500. NOTE: Please always seek the guidance of a tax advisor. It may be beneficial for some property owners to depreciate certain items on the property (fences, fixtures, etc) at different depreciation schedules, which is allowed via cost segmentation. Depreciation Tax Upon the sale of an investment property: The IRS requires the payment of a depreciation recapture tax. The tax rate is currently set at 25%. In the example above, if the duplex was owned for 10 years, the entire depreciation taken on the property would amount to $255,000 ($25,500 x 10). The IRS requires a recapture tax on that entire amount. Hence, the sale of the duplex will result in a $63,750 deprecation recapture tax (255,000 x 25%). This is in addition to state and federal capital gains taxes. The deprecation recapture tax as well as any associated capital gains taxes can be deferred in full via a 1031 Exchange. Conclusion Of all the benefits of owning real estate: Depreciation may be one of the most important. The tax advantage depreciation offers is powerful. The IRS will always assume that depreciation is taken and will hold an investor liable for the deprecation recapture tax – even if the investor failed to take advantage of the depreciation. Bottom line: make sure you are taking advantage of this powerful tool.The subject matter in this newsletter is intended as general information only and not intended as tax or legal advice. Please always consult your tax or legal advisor for any specific tax or legal matters.
Of all the benefits of owning investment real estate, one of the least understood is the benefit of depreciation. Depreciation is a method for matching the costs of acquiring property over the property's estimated economic life. The IRS requires that most property be depreciated via the ‘straightline’ depreciation method. Using the straightline method, residential income properties are depreciated over 27.5 years. Commercial property is depreciated over 39 years. Depreciation Calculations: It is important to note that land is not depreciable. In order to properly calculate depreciation, the value of land must be excluded. For example, a $1MM duplex with land worth $300,000 has $700,000 worth of depreciable real estate.Using the straightline depreciation method, the annual depreciation amount is approximately $25,500 ($700,000/27.5) NOTE: The IRS will typically not challenge the assessment of the land value if it reasonable. A tax advisor, attorney or real estate agent should be able to provide guidance for what is reasonable based on the location and type of land.Depreciation BenefitsDeprecation is an ‘intangible expense’ that will reduce the reportable taxable income from the property. This is good, because the end result is more money in your pocket and less tax to the IRS. Here’s how it works: Assume that the yearly rental income from the example duplex is $36,000. At the end of the year, this will have to be reported to the IRS. However, the IRS does not tax the entire $36,000. The taxable income from the property is calculated as follows:Rental Income(Less Expenses) (less Deprecation) = Taxable Rental Income. If the expenses of operating and managing the duplex are $5,000 for the year, the taxable rental income is calculated as follows: Rental Income $36,000 (less Expenses, $5,000) (less Deprecation, $25,500 = Taxable Rental Income $5,500. NOTE: Please always seek the guidance of a tax advisor. It may be beneficial for some property owners to depreciate certain items on the property (fences, fixtures, etc) at different depreciation schedules, which is allowed via cost segmentation. Depreciation Tax Upon the sale of an investment property: The IRS requires the payment of a depreciation recapture tax. The tax rate is currently set at 25%. In the example above, if the duplex was owned for 10 years, the entire depreciation taken on the property would amount to $255,000 ($25,500 x 10). The IRS requires a recapture tax on that entire amount. Hence, the sale of the duplex will result in a $63,750 deprecation recapture tax (255,000 x 25%). This is in addition to state and federal capital gains taxes. The deprecation recapture tax as well as any associated capital gains taxes can be deferred in full via a 1031 Exchange. Conclusion Of all the benefits of owning real estate: Depreciation may be one of the most important. The tax advantage depreciation offers is powerful. The IRS will always assume that depreciation is taken and will hold an investor liable for the deprecation recapture tax – even if the investor failed to take advantage of the depreciation. Bottom line: make sure you are taking advantage of this powerful tool.The subject matter in this newsletter is intended as general information only and not intended as tax or legal advice. Please always consult your tax or legal advisor for any specific tax or legal matters.
First Time Home Buyers Struggling with Foreclosures
First Time Home Buyers Struggling with Foreclosures. For the past couple of months I’ve been writing about the surge in home sales in Silicon Valley and the fact that inventory of homes available for sale has been dwindling. That fact has broken through to a whole new level. After reviewing last week’s sales figures, it became apparent that the number of homes that are pending (sold, but awaiting closure) exceed those actually available for sale. Let’s state it this way. This means that more buyers that have bought homes and are waiting for them to close than there are homes remaining for sale. Be prepared for a quick run up in prices. For first time home buyers, REO properties (foreclosures) are very difficult to obtain. Because of the way banks price properties, their listing prices are several months old. When there’s a run up in prices, there are multiple offers for these underpriced properties. That puts Jack and Jill first timer at a disadvantage because they are typically coming in with less down payment than investors. And because of the volume of offers, the banks are selecting the offers with most or all cash with no contingencies, something a first timer rarely can keep up with. I keep hearing that there’s another wave of foreclosures coming, but I still haven’t seen them. For the next quarter, I’d suggest that first timers consider narrowing their search to looking at properties with traditional sellers that have been on the market a while, unless they have a lot of cash.
Tuesday, July 21, 2009
Cambrian Home Prices Poised to Shift (San Jose)
Cambrian Home Prices Poised to Shift (San Jose). There is a very popular area of San Jose referred to as the Cambrian area. It’s a nice part of San Jose with many retail options and it’s still somewhat affordable. That may be changing. I find that most people who do not live in Cambrian have heard much about it but aren’t quite sure where it is. Here’s some help. Geographically, the boundaries are roughly Foxworthy (northern) Highway 17 (western) Almaden Road (southern) and Almaden Expressway (eastern). It’s surrounded by Willow Glen, Campbell, Los Gatos, and Almaden. Based on the info I’m seeing, homes available for sale are down. WAY down. Down 80% to be exact. One of the metrics I follow is “Months of Inventory”. To clarify, Months of Inventory measures how many months it would take to sell all of the existing homes for sale. For example, if an area has 600 homes for sale and they are selling at a rate of 100 per month, there would be six months worth of inventory available for sale. A Months of Inventory number greater than six months is a buyer’s market, less than six months is a seller’s market. There’s rarely ever equilibrium because that only takes place as a rather brief period between a shift in the market. As I’ve been sharing for several months now, we are now in a seller’s market. Ready? The Months of Inventory in the Cambrian area are down to less than 2 months! Get prepared because prices rise when more buyers are chasing fewer in demand homes. Just like supply and demand for any other product. http://www.garynobile.com/Friday, July 17, 2009
Willow Glen Home Sales Up
Willow Glen Home Sales Up. Willow Glen homes sales are up 57% from last year. If one looks at pending sales as a leading indicator (as I do), it’s a compelling story about the health of the local real estate market. I can recall my first day in statistics class. My professor’s opening line was: ‘There are lies, damn lies, and statistics.” I also heard a famous author say, “If you didn’t read the newspaper you were uninformed, but if you read it you were misinformed”. But if one looks carefully at the information and interprets it correctly, it can be a potent indicator. Once in a while the press gets it right and the statistics are correct. Today, the San Jose Mercury News had headlines showing that home sales are up to the highest levels in 3 years. Perhaps they finally are starting to read my blog because I’ve been talking about this for several months now. The point is, if you’re looking to trade up, do it now because waiting will not only cost you in terms of home price, but it will cost you in property taxes as well! Search for your new home at: www.GaryNobile.com Need a consultation for the value of your home? www.GaryNobile.comThursday, July 16, 2009
Blog Writer Reveals Himself
Blog Writer Reveals Himself. Looking back at my past several months of blogging, I noticed how one dimensional I’ve become. Real estate, real estate, real estate. There has to be more to life. While I’m very pleased with the content I’ve shared in hopes to inform the public on the fast changing environment of real estate, that’s all I’ve talked about. When I read news, I suppose I never really cared so much about the writer so much and figured you’re probably much the same way. Just give me the info, and let me be on my way. I’m too busy to read about your personal crap. But in case this is one of those days where you have an extra minute to read about my, ur, stuff, here it is.
Last night I played in our first softball game of the summer league at Twin Creeks in Sunnyvale. It’s a great park (except for the “Candlestick South” winds). I’ve been playing softball as an adult for over 20 years and their umpires are the best I’ve ever been around. They’re accurate, fair, and often times personable. They don’t get too caught up in the ego of being in control unless one does something dumb enough to irritate them (something I’ve learned the hard way). Twin Creeks has a nice clubhouse for food and drinks and the fields are fairly well maintained. Anyway, last night was an exciting game. We started with 8 players (you need 10 in softball) and the other team took advantage of the obvious holes in our defense going up 4-0 in the first inning. Then the rest of our guys showed up and we came back going up 15-10 in the sixth inning. The opposing team tied it in the top of the last inning and we didn’t score when we were up causing us to go to extra innings. The opposing team then went ahead 17-15. Our last set of at bats was interesting. We came back to tie it 17-17 with two men on base and two outs. During the game I was walked two times (who wants to walk in softball?!) got one hit, made one out (fielder’s choice) and scored two runs. So I was in the first base coaching box waiting to see what would happen with one of our good hitters at the plate. He hits a soft pop up a little over the second baseman’s head, but it was catchable. But their guy dropped it and we won. As much as I love winning, it reminded me of two weeks earlier. We were in a playoff game where it was all tied up in extra innings and I dropped the ball. We lost. Our team played a terrific game and I felt horrible. It wasn’t like me to make an error in a pressure situation. But last night all I could think of was, I’m glad it wasn’t me.
Last night I played in our first softball game of the summer league at Twin Creeks in Sunnyvale. It’s a great park (except for the “Candlestick South” winds). I’ve been playing softball as an adult for over 20 years and their umpires are the best I’ve ever been around. They’re accurate, fair, and often times personable. They don’t get too caught up in the ego of being in control unless one does something dumb enough to irritate them (something I’ve learned the hard way). Twin Creeks has a nice clubhouse for food and drinks and the fields are fairly well maintained. Anyway, last night was an exciting game. We started with 8 players (you need 10 in softball) and the other team took advantage of the obvious holes in our defense going up 4-0 in the first inning. Then the rest of our guys showed up and we came back going up 15-10 in the sixth inning. The opposing team tied it in the top of the last inning and we didn’t score when we were up causing us to go to extra innings. The opposing team then went ahead 17-15. Our last set of at bats was interesting. We came back to tie it 17-17 with two men on base and two outs. During the game I was walked two times (who wants to walk in softball?!) got one hit, made one out (fielder’s choice) and scored two runs. So I was in the first base coaching box waiting to see what would happen with one of our good hitters at the plate. He hits a soft pop up a little over the second baseman’s head, but it was catchable. But their guy dropped it and we won. As much as I love winning, it reminded me of two weeks earlier. We were in a playoff game where it was all tied up in extra innings and I dropped the ball. We lost. Our team played a terrific game and I felt horrible. It wasn’t like me to make an error in a pressure situation. But last night all I could think of was, I’m glad it wasn’t me.
Wednesday, July 15, 2009
Santa Clara Home Sales Up, For Sale Down
Santa Clara Real Estate Home Sales Up, For Sale Down.In my effort to keep you apprised of various areas around Silicon Valley, I thought it would be a good idea to spotlight different areas over time. If we care about real estate, we all look at the numbers that show us how our neighborhood measure up with others in the area. Sometimes we lose perspective because we’re too busy comparing and not investing enough time viewing the information in an in depth manner to make it meaningful. And while most writers have their biases, I’m doing my best to keep this neutral. I’ll provide you with what I believe is a meaningful interpretation as if I were the consumer. You may find that hard to believe, but bear with me. Take a look over time at what I’ve written. And if you don’t believe it, post a comment. Good or bad, I can take it. Back to the info at hand. Santa Clara inventory is way down from a year ago. Homes that looked overpriced and in poor condition back then are selling briskly now. If you’re thinking about selling, it might be a good time to ride this wave. The city seems pretty determined to make the 49ers stadium in Santa Clara a reality. That will in effect be Santa Clara’s home grown stimulus package. So while it will take several years for the stadium to be built, the economic activity will begin well before that. That’s a bit of peace of mind buyers can have buying in Santa Clara. Need more info? www.GaryNobile.com
Tuesday, July 14, 2009
Silicon Valley Entry Level Real Estate on Fire
Silicon Valley Entry Level Homes are on Fire. No, this doesn't mean that San Jose homes are actually ablaze. It does mean that entry level single family housing in the Silicon Valley real estate market continues at its frantic pace. This week at our weekly sales meetings, many agents are again stating several cases of multiple offers by buyers. In one case, there were over 50 offers on a one house! On another case there were over 20 offers! Pending sales (sales where a seller has accepted a buyer's offer but has not yet closed) have now exceeded the number of homes for sale. That puts us squarely in a seller's market. One could argue (correctly so) that prices aren't what they were 2 years ago. However, I'm seeing cases in this area where banks with foreclosure properties for sale will only look at offers with large sums of cash down payments. It gives you a sense of the strength of the market when sellers start to dictate terms. I keep hearing from the press that there are more foreclosures coming when adjustable mortgages reset. But apparently the market has gotten tired of listening and is buying real estate now.
Wednesday, July 8, 2009
Palo Alto Townhouses a Bit Sluggish
Palo Alto Townhouses a Bit Sluggish.
After conducting some research for a client in Palo Alto, an interesting phenomenon surfaced. Palo Alto townhouses seem to be having a surplus of demand (shown in red) compared to demand (shown in green) than some other market segments in our area. The data suggests that while more properties are selling, an even greater number are being put on the market. This is a change from many other areas of Santa Clara County the past couple of months. Understanding the why is what’s important most consumers. From what we’ve been able to observe, we believe that people are opting out of the Palo Alto Townhomes and are trading to single family homes that have come down significantly in price. Palo Alto has always been a desirable area to own real estate and that hasn’t changed. I was recently working with a developer not long ago who had built a magnificent home in Palo Alto only to learn that it wasn’t quite worth what he thought it would be. He dropped his price from $4.2 million to $3.2 million, and that’s nothing to sneeze at. The townhouse market is not nearly as expensive in most cases. However, an $800k townhouse in Palo Alto will translate into a pretty nice single family home in a lot of areas in Silicon Valley right now. And the single family homes won't have HOA dues and generally will include a more spacious yard. The point for sellers in this segment is to make sure they price their home spot on, or it will sit and won’t sell. The point for buyers in this space is that you’re in the driver’s seat. Want a larger view and more graphics? Drop me an e-mail. www.GaryNobile.com
After conducting some research for a client in Palo Alto, an interesting phenomenon surfaced. Palo Alto townhouses seem to be having a surplus of demand (shown in red) compared to demand (shown in green) than some other market segments in our area. The data suggests that while more properties are selling, an even greater number are being put on the market. This is a change from many other areas of Santa Clara County the past couple of months. Understanding the why is what’s important most consumers. From what we’ve been able to observe, we believe that people are opting out of the Palo Alto Townhomes and are trading to single family homes that have come down significantly in price. Palo Alto has always been a desirable area to own real estate and that hasn’t changed. I was recently working with a developer not long ago who had built a magnificent home in Palo Alto only to learn that it wasn’t quite worth what he thought it would be. He dropped his price from $4.2 million to $3.2 million, and that’s nothing to sneeze at. The townhouse market is not nearly as expensive in most cases. However, an $800k townhouse in Palo Alto will translate into a pretty nice single family home in a lot of areas in Silicon Valley right now. And the single family homes won't have HOA dues and generally will include a more spacious yard. The point for sellers in this segment is to make sure they price their home spot on, or it will sit and won’t sell. The point for buyers in this space is that you’re in the driver’s seat. Want a larger view and more graphics? Drop me an e-mail. www.GaryNobile.com
Tuesday, July 7, 2009
New Regulation Raises Costs to Real Estate Buyers
New Regulation Raises Costs to Real Estate Buyers.
Every now and then, the government gets it all wrong. This time, they’re regulating the appraisal process and it’s coming at the expense of the consumer….again! This new regulation requires that mortgage brokers outsource appraisals to a third party company who in turn outsources the appraisal to an appraiser. The idea was put into law in April with the intent to eliminate collusion between mortgage brokers and an appraisers. Before April 2009, the cost of an appraisal on a typical 3 bedroom 2 bath home in Silicon Valley was about $350. Now it’s $500. That third party company that picks up the phone and calls the appraiser costs the consumer $150! That’s a bit ridiculous don’t you think? Oh, and one more thing, the mortgage broker cannot even talk to the appraiser, even if there’s a problem. Ironically, sometimes appraisers don’t always understand the market dynamics with prices changing, inventory on the market and so forth causing inaccurate values. If the mortgage professional calls and speaks to the appraiser, that appraisal cannot be used for that transaction. Cha-Ching, there goes another 500 bucks. And if that buyer has an FHA loan, guess what? There’s another FHA appraisal that now has to be conducted. That’s $1,000 the buyer has to pay or they won’t get their loan. But the government thinks this will solve all the real estate problems. Let’s think back to the dot-com bust in Silicon Valley earlier this decade. Who did the government blame what that time? The appraisers. They said it was the appraiser’s fault that prices got overheated. It was their fault that when there was a mini recession in hi tech, prices dropped too quickly. At that time the government said, well, let’s regulate those nasty appraisers. Let’s require that an appraiser be certified by a regulatory authority, then everything will be swell, At that time, it caused appraisals to go from approximately $150-$200 to about $300-$350. Let’s see, how did that work out? Take a look at the real estate market in 2007 & 2008 and you’ll find the answer. Is this really what we need? Sorry for the rant (but not really). www.GaryNobile.com
Every now and then, the government gets it all wrong. This time, they’re regulating the appraisal process and it’s coming at the expense of the consumer….again! This new regulation requires that mortgage brokers outsource appraisals to a third party company who in turn outsources the appraisal to an appraiser. The idea was put into law in April with the intent to eliminate collusion between mortgage brokers and an appraisers. Before April 2009, the cost of an appraisal on a typical 3 bedroom 2 bath home in Silicon Valley was about $350. Now it’s $500. That third party company that picks up the phone and calls the appraiser costs the consumer $150! That’s a bit ridiculous don’t you think? Oh, and one more thing, the mortgage broker cannot even talk to the appraiser, even if there’s a problem. Ironically, sometimes appraisers don’t always understand the market dynamics with prices changing, inventory on the market and so forth causing inaccurate values. If the mortgage professional calls and speaks to the appraiser, that appraisal cannot be used for that transaction. Cha-Ching, there goes another 500 bucks. And if that buyer has an FHA loan, guess what? There’s another FHA appraisal that now has to be conducted. That’s $1,000 the buyer has to pay or they won’t get their loan. But the government thinks this will solve all the real estate problems. Let’s think back to the dot-com bust in Silicon Valley earlier this decade. Who did the government blame what that time? The appraisers. They said it was the appraiser’s fault that prices got overheated. It was their fault that when there was a mini recession in hi tech, prices dropped too quickly. At that time the government said, well, let’s regulate those nasty appraisers. Let’s require that an appraiser be certified by a regulatory authority, then everything will be swell, At that time, it caused appraisals to go from approximately $150-$200 to about $300-$350. Let’s see, how did that work out? Take a look at the real estate market in 2007 & 2008 and you’ll find the answer. Is this really what we need? Sorry for the rant (but not really). www.GaryNobile.com
Monday, July 6, 2009
Having Trouble Paying Your Mortgage? (Part 2)
If you’ve already tried talking to the bank to renegotiate your loan and you aren’t getting anywhere, there are still a few things you can do to alleviate your pain. The most obvious one is to sell the home. For many, that’s an emotional decision. It brings feelings of fear and failure. However, it might be better to sell the home and preserve your credit (and your sanity) if you’ve gotten in a little over your head. Look, things change. You may have bought your home with an unwritten guarantee of values always going up. By the way, that’s what Wall Street believed when they were selling all those sub-prime mortgages as high rated securities so you’d be in good company. You may have experienced a job lay-off or relocation God forbid; you may have even suffered a death of a co-borrower. Perhaps your interest rate is adjusting upward beyond what you expected. The point is, weather you feel that it was something you had control over or not, selling your home is nothing to be ashamed of. Sometimes just you need to hit the reset button and agree to re-engage in home ownership in the future when your circumstances improve. The obvious catch is that first you have to have enough equity in your home (or cash saved) to enable yourself to sell it. How much does it cost to sell a home? It varies, but I’d use a guide of about 7% of the sales price. If you don’t have that much cash or equity to close the gap, there are other options. Stay tuned for Part 3. Questions? Try me at www.GaryNobile.com
Thursday, July 2, 2009
How Does Yield Spread Help Buyers Buy?
I thought this was an excellent article and wanted to share it with my readers. ~ Gary
RISMEDIA, July 2, 2009-Opportunity is knocking fairly loudly for many considering homeownership. Home prices have declined in many markets around the country and tax incentives and other inducements have first-time home buyers and others weighing the possibilities.
Home affordability, as defined by the National Association of Realtors’ Housing Affordability Index, stands near all-time highs, thanks to declining prices and historically low mortgage rates. Yet, while some consumers hold off on purchases as they attempt to catch the home-price bottom, they could miss the mortgage-financing opportunity of a lifetime.
Consider the weekly average yield spread between Fannie Mae’s 6.5-year bond to the “benchmark” 10-year Treasury note, a classic relationship that involves the cost of making mortgage loans to consumers. Before disarray in the financial markets, the spread ran about 1% above Treasury bonds, reflecting investors’ confidence that owning debt of bonds backed by Fannie and Freddie is nearly as safe as owning government bonds.
The spread began widening in July 2007 as the global financial crisis unfolded, then spiked to above 2% during the next year as the U.S. economy seized and credit grew scarce. It grew to a startling 2.5% late last year as bond investors’ skittishness about continued delinquencies and defaults-and that the risk of these mortgages had not been properly assessed-resulted in higher risk premiums and higher costs to borrowers.
Late last year, however, the Federal Reserve Bank stepped in with a promise to purchase $500 billion in Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities, and raised that figure to $1.25 trillion in March. The move, combined with loan-modification initiatives and other federal intervention, restored investor confidence in the secondary market and mortgage rates declined rapidly. The yield spread in March dropped to 1% and zero and then fell to an unprecedented minus 0.5% by early May.
This condition is certainly unique and, likely, short-lived. Statistically, when the yield spread deviates from historical norms, the chances are great it will return to those levels. That could quickly drive mortgage rates higher. How much is anyone’s guess, but if the cost of making a mortgage goes up by 1.5% so, too, might mortgage interest rates.
Yet, factor in some additional variables. The marketplace for bonds relies heavily on purchases by offshore buyers who remain skeptical as the global economy continues in flux. Then there’s the inflation-deflation conundrum. Many fear a deflationary spiral-with falling prices for goods and services that lead to falling wages-can still drag down a stabilizing U.S. economy.
Conversely, others believe inflation will kick in, ushering in higher consumer prices, including higher mortgage rates. How this issue shakes out will have important implications for interest rates.
One thing is crystal clear: the odds that mortgage interest rates will rise are much greater than any continued mortgage-rate decline. And for most home buyers, the cost of mortgage financing can be as important as the price of the home itself.
Real estate sales professionals can help their customers make the best long-term decisions by demonstrating the degree to which housing prices and mortgage interest rates could move from this point forward. Customers waiting for the absolute lowest price on a house could miss a golden financing opportunity and the lowest overall cost of homeownership.
Written By Andrew Downs
RISMedia welcomes your questions and comments. realestatemagazinefeedback@rismedia.com.
RISMEDIA, July 2, 2009-Opportunity is knocking fairly loudly for many considering homeownership. Home prices have declined in many markets around the country and tax incentives and other inducements have first-time home buyers and others weighing the possibilities.
Home affordability, as defined by the National Association of Realtors’ Housing Affordability Index, stands near all-time highs, thanks to declining prices and historically low mortgage rates. Yet, while some consumers hold off on purchases as they attempt to catch the home-price bottom, they could miss the mortgage-financing opportunity of a lifetime.
Consider the weekly average yield spread between Fannie Mae’s 6.5-year bond to the “benchmark” 10-year Treasury note, a classic relationship that involves the cost of making mortgage loans to consumers. Before disarray in the financial markets, the spread ran about 1% above Treasury bonds, reflecting investors’ confidence that owning debt of bonds backed by Fannie and Freddie is nearly as safe as owning government bonds.
The spread began widening in July 2007 as the global financial crisis unfolded, then spiked to above 2% during the next year as the U.S. economy seized and credit grew scarce. It grew to a startling 2.5% late last year as bond investors’ skittishness about continued delinquencies and defaults-and that the risk of these mortgages had not been properly assessed-resulted in higher risk premiums and higher costs to borrowers.
Late last year, however, the Federal Reserve Bank stepped in with a promise to purchase $500 billion in Fannie Mae, Freddie Mac and Ginnie Mae mortgage-backed securities, and raised that figure to $1.25 trillion in March. The move, combined with loan-modification initiatives and other federal intervention, restored investor confidence in the secondary market and mortgage rates declined rapidly. The yield spread in March dropped to 1% and zero and then fell to an unprecedented minus 0.5% by early May.
This condition is certainly unique and, likely, short-lived. Statistically, when the yield spread deviates from historical norms, the chances are great it will return to those levels. That could quickly drive mortgage rates higher. How much is anyone’s guess, but if the cost of making a mortgage goes up by 1.5% so, too, might mortgage interest rates.
Yet, factor in some additional variables. The marketplace for bonds relies heavily on purchases by offshore buyers who remain skeptical as the global economy continues in flux. Then there’s the inflation-deflation conundrum. Many fear a deflationary spiral-with falling prices for goods and services that lead to falling wages-can still drag down a stabilizing U.S. economy.
Conversely, others believe inflation will kick in, ushering in higher consumer prices, including higher mortgage rates. How this issue shakes out will have important implications for interest rates.
One thing is crystal clear: the odds that mortgage interest rates will rise are much greater than any continued mortgage-rate decline. And for most home buyers, the cost of mortgage financing can be as important as the price of the home itself.
Real estate sales professionals can help their customers make the best long-term decisions by demonstrating the degree to which housing prices and mortgage interest rates could move from this point forward. Customers waiting for the absolute lowest price on a house could miss a golden financing opportunity and the lowest overall cost of homeownership.
Written By Andrew Downs
RISMedia welcomes your questions and comments. realestatemagazinefeedback@rismedia.com.
Wednesday, July 1, 2009
Having Trouble Paying Your Mortgage?
I recently had a conversation with a gentleman who was telling me that he and his wife were having trouble paying their mortgage and thought it would be best not to pay for 3 months then request a loan modifation. A lot of damage can be done to your credit in 3 months. I explained that in 57% of all foreclosures cases, no one contacted the bank to try to solve the problem. If you are having trouble paying your mortgage, you might want to try contacting the bank first. It doesn’t cost you anything (except for some time) and you might be able to work out a payment plan that provides you some relief for a couple of years. I know people who have successfully modified their loans directly with the bank. It’s worth a try. It's free and it preserves your credit. If you have questions or need help in this area, contact me through www.GaryNobile.com
Friday, June 26, 2009
Willow Glen Pending Sales Up
Pending sales are up a whopping 51% in Willow Glen, a prime section of the San Jose, CA real estate market. The quaint neighborhoods with their tree lined streets and friendly downtown are again gathering buyer interest. When a home is “Pending Sale” the seller has accepted an offer from a buyer, but the deal has not yet closed. During the pending phase, buyers are typically conducting inspections, reviewing the seller’s disclosures, getting appraisals and obtaining their loans. At the end of May 2008, 49 homes were pending. In May of 2009, that number has jumped to 74. With median prices dropping in the area, buyers who have previously been priced out of Willow Glen are now able afford their dream home. To see homes available for sale in Willow Glen, please go to my FREE search engine at www.GaryNobile.com
Wednesday, June 24, 2009
San Jose Real Estate Inventory Way Down
Inventory of homes for sale in San Jose is down, way down. A reliable metric I like to use is called Months of Inventory (MOI). This will paint me a fairly accurate picture of how well homes are selling compared to the inventory of homes for sale. For instance, if there are 90 homes on the market in a given area and 10 homes per month are selling, that tells us that there are 9 MOI. Anything over 6 months is considered a buyer’s market, under 6 months, a seller’s market. Looking back to December of 2007, there was 14.5 MOI, definitely a buyer’s market. As of the end of May, there was less than 2 MOI, clearly a seller’s market. These numbers don’t lie. If you’re a buyer, be prepared to compete with other buyers to get the home you want. If you’re a seller, things are looking up for you, finally. For more info about your specific area, please contact me at garynobile@aol.com or www.GaryNobile.com
Monday, June 22, 2009
Why Appraisals Can Cause Grief
Buyers Take Note: Write your purchase contract to give you maximum flexibility to renegotiate or walk away. The market is very hot right now in the price point under $500k for single family homes. Here's a recent issue that is causing us grief in the real estate industry. As prices are rising, appraisers aren't keeping up with the market. To be able to get a home in this price range buyers are typically faced with multiple offers from other buyers. The successful bidder starts the loan process by getting an appraisal. The appraiser is basing their value on homes that sold a couple of months ago before prices went up and show an appraised value less than the agreed-to purchase price. The only way a lender will lend money on a home in this situation is if the buyer pays the difference between the appraised value and the contractual value in cash. If the contract was written properly, the buyer can also try to renegotiate the price with the seller or walk away from the deal, out $500 she spent for the appraisal. The other option is to communicate with the appraiser the current market conditions and request him to make adjustments, something they are often unwilling to make. Some say this is a good process to protect lenders. Some say this inhibits a free market economy because no one cared when prices were dropping.
Friday, June 19, 2009
Silicon Valley Higher End Home Prices Improve
- By Sue McAllister, Mercury News, 6/19/2009
"Folks who see the value in the higher end are jumping into the market," he said.
Tuesday, June 16, 2009
Loan Modification Scams
After just attending a legal seminar from a top local attorney, I learned a few things about loan mod's that you should know about.
1) Lender's don't like dealing with loan modification companies. They figure if the borrower doesn't have the money to pay them, how can they afford to pay a 3rd party company?
2) Some loan mod companies have had borrowers sign Power of Attorney documents enabling the company to sign on the borrower’s behalf. After the dust settles and the loan has been modified, some borrowers are finding that the loan modification merely took the amount that was past due and added it to the principle while keeping the payment and interest rate the same. If the borrowers couldn’t afford the loan in the first place, the problem repeats itself.
3) There are some good companies out there, but be careful what you sign!
1) Lender's don't like dealing with loan modification companies. They figure if the borrower doesn't have the money to pay them, how can they afford to pay a 3rd party company?
2) Some loan mod companies have had borrowers sign Power of Attorney documents enabling the company to sign on the borrower’s behalf. After the dust settles and the loan has been modified, some borrowers are finding that the loan modification merely took the amount that was past due and added it to the principle while keeping the payment and interest rate the same. If the borrowers couldn’t afford the loan in the first place, the problem repeats itself.
3) There are some good companies out there, but be careful what you sign!
Tuesday, May 19, 2009
Open House Activity
Last week I was holding an Open House on a Bank Owned home. This particular single family home was listed at $444k in Blossom Valley and had 3 beds/2 baths. I found it interesting that so many buyers who came in were sharing with me that they had been out-bid on several homes. So the eveidence suggests that the entry level homes are a hot product in today's marketplace. Please contact me for your free list of bank owned homes.
Wednesday, May 6, 2009
Home Buyer Layoff Protection Program
The California Association of Realtors has just announced a program which helps protect home buyers against a potential lay-off by providing FREE mortgage insurance to the buyer(s). What that means is that if you buy a home and are laid off within the first year after owning, you will be given $1,500 per month for up to 6 months. According to California officials, 6 months is approximately twice the amount of time it takes an average employee to obtain new employment. If there are two buyers and the second buyer also loses their job, the second buyer will receive an additional $750 per month. So in a worst case scenario where two buyers lose their job, they will be protected for up to $2,250 per month for up to six months.
Below are the eligibility requirements.
· You must be represented by a member of the California Association of Realtors
· You must open escrow after April 2, 2009 and closed escrow by December 31, 2009
· You must be a first time home buyer (not owned in the past 3 years)
· You must live in the home you buy
· No income limitations
· You must be a “W2” employee
· Cannot be a principle (business owner) of the business to which you are employed
· Other restriction may apply
Please contact me for further details and an application.
Below are the eligibility requirements.
· You must be represented by a member of the California Association of Realtors
· You must open escrow after April 2, 2009 and closed escrow by December 31, 2009
· You must be a first time home buyer (not owned in the past 3 years)
· You must live in the home you buy
· No income limitations
· You must be a “W2” employee
· Cannot be a principle (business owner) of the business to which you are employed
· Other restriction may apply
Please contact me for further details and an application.
Monday, April 27, 2009
Look Mom, I'm on TV!
This week I was honored to be interviewed by CreaTV, comcast channel 15. I was asked many questions on subjects such as the stimulus package, buying a foreclosure, market updates and divorce real estate questions. If you're interested, it will air in San Jose and Campbell on Wednesday 4/29/09 at 8:30 on Comcast channel 15. I will also appear in another segment the following Wednseday. Go ahead and watch so you can get an inside scoop and tell me what you think. I'd love your feedback! The same show will air in Los Gatos and Monte Soreno (same time, same day of week) but Comcast says it will be about 4 weeks from now.
Thursday, April 23, 2009
Strategy to Lower your Monthly Payment
When buying a home, most people try to negotiate to get the lowest price while some negotiate to get the lowest payment. What's the difference you ask? If you lower you sales price your monthly payment will certainly drop. But if you use a "loan rate buy-down" strategy your monthly payment will drop even more. I have reviewed this with several mortgage professionals and the concensus is clear. If you ask the seller to pay your closing costs so you can a lower your interest rate (pay your loan "points") you will save 7 times more in your monthly payment than you would have saved if you asked for the same amount in a price reduction. This is after taking into account changes in property taxes as well! Lenders are offering very low cost rate buy-downs compared to what they have historically charged. But there's another benefit to the buyer. Qualifying for your loan will be easier. Make sure to have your agent articulate the benefits to the seller so they understand what they have to gain as well. Happy house hunting!
Wednesday, April 22, 2009
Divorce Real Estate - HELOC's
When it comes to a divorce with real estate involved here's one thing I would recommend. If you ever had a Home Equity Line of Credit (HELOC) on your home, go to the bank to make sure it's closed. I have found that many couples will pay down a HELOC after borrowing against their home, but if BOTH spouses don't go to the bank and sign to close it, it remains open. So who cares? Well, if one spouse leaves the home and still has the ability to use the HELOC like an ATM machine (which they can do without the other's knowledge) this will only complicate matters. I know it's hard, but for your own sake, try to be collaborative and work together. Good Luck.
Tuesday, March 24, 2009
Divorce Real Estate
Going through a divorce can by a very traumatic experience. With ex's, kids, money, and real estate involved, it's no wonder that it's difficult to think straight. And that doesn't even include the pressure associated with the cause of the divorce. The real estate portion is what I’d like to focus on here today. There are so many items that come into play that it’s important to stay focused on MOVING FORWARD WITH MORE. Here’s the roadmap: Make sure you talk to your attorney and an RCS-D Realtor (Real Estate Collaboration Specialist – Divorce). If you agree to an MSA (Marital Separation Agreement) before you adequately assess the value of your home, you could be in for a big surprise. Ladies, it’s you who most often get the short end of the stick. Let me explain.
It is typically the ladies that are more emotionally attached to the home. If you have kids and they’re in school, you don’t want to move because you don’t want to add changing schools to the list of issues the kids will deal with. Very admirable. Often times, the attorney will suggest you do an appraisal in the home, subtract the mortgage and split the equity. There’s large risk to taking that approach. If you get an appraisal on your home, take that value and subtract the mortgage owed, that DOES NOT equal the remaining equity for you to split. Here’s why. An appraisal typically does not include value adjustments for the condition of your home. An appraiser is not a licensed inspector and cannot make a highly accurate assessment of the value. Let’s assume that you have a termite problem that you can’t see and an aged roof that’s about ready to give, but that you don’t know about because it hasn’t become a problem yet. Let’s also assume your toilet has a leak coming from the seal between the toilet and the floor that you can’t see. And under your bathroom tile, the leak has caused the subfloor to rot. By the way, these are things that many of the homeowners I work with are surprised to learn when we do inspections prior to putting their home on the market. Being an astute homeowner who takes good care of your home does not make you immune to the unknown. In this scenario, there are tens of thousands of dollars of repairs that will be needed sooner…or later. Whoever stays in the home gets stuck paying the bill. Oh, and we didn’t talk about closing costs. When you sell your home, there are closing costs that are paid. Often times, the unsuspecting remaining resident doesn’t consider that these costs will need to be paid when the home is ultimately sold and that it should be deducted from the equity before the money is split. Sometimes, as hard as it seems, it’s better to Move Forward with More. Right-size your residence to a rental if need be and stay in the same school district. Stay tuned for future recommendations.
- Gary Nobile RCS-D Realtor
It is typically the ladies that are more emotionally attached to the home. If you have kids and they’re in school, you don’t want to move because you don’t want to add changing schools to the list of issues the kids will deal with. Very admirable. Often times, the attorney will suggest you do an appraisal in the home, subtract the mortgage and split the equity. There’s large risk to taking that approach. If you get an appraisal on your home, take that value and subtract the mortgage owed, that DOES NOT equal the remaining equity for you to split. Here’s why. An appraisal typically does not include value adjustments for the condition of your home. An appraiser is not a licensed inspector and cannot make a highly accurate assessment of the value. Let’s assume that you have a termite problem that you can’t see and an aged roof that’s about ready to give, but that you don’t know about because it hasn’t become a problem yet. Let’s also assume your toilet has a leak coming from the seal between the toilet and the floor that you can’t see. And under your bathroom tile, the leak has caused the subfloor to rot. By the way, these are things that many of the homeowners I work with are surprised to learn when we do inspections prior to putting their home on the market. Being an astute homeowner who takes good care of your home does not make you immune to the unknown. In this scenario, there are tens of thousands of dollars of repairs that will be needed sooner…or later. Whoever stays in the home gets stuck paying the bill. Oh, and we didn’t talk about closing costs. When you sell your home, there are closing costs that are paid. Often times, the unsuspecting remaining resident doesn’t consider that these costs will need to be paid when the home is ultimately sold and that it should be deducted from the equity before the money is split. Sometimes, as hard as it seems, it’s better to Move Forward with More. Right-size your residence to a rental if need be and stay in the same school district. Stay tuned for future recommendations.
- Gary Nobile RCS-D Realtor
Tuesday, February 24, 2009
Is the Bottom Here?
Everyone says that you won't know the bottom of the real estate market until you passed it, which I suppose is true. But a better question to ask is how do you know when it starts to take shape so you can be amongst the first to respond? One might consider that the cheapest proeprties on the market right now are bank owned foreclosed homes. The condition of these properties range from very good to horrible. My personal opinion has been that when we start seeing multiple offers on these homes that it would be a good indicator that inventory is shrinking and these low prices will start to be bid up. That, in my opinion, is a first signal of the bottom. Of course, more foreclosures could go on the market, the economy this, that, and the other, etc. Just for the record, 2 weeks ago our office had 6 bank owned homes sell that had been on the market for several months. Many of them had multiple offers. Oh, and while I was at a title company yesterday (signing documents with one of my investor clients) I learned that the title company was struggling to keep up with the sales of bank owned homes because a convoy of investors from China came this passed week-end buying as many bank owned properties they could. This was after we had already sold 6 in our office. Is this the bottom..... stay tuned.
Saturday, January 10, 2009
Who's Bailing Out Who?
Opinion:
I never did agree with the thought of the U.S. Governement bailing out private companies. That's not the American Dream I was brought up to believe in (wow, I sound like my dad). I was taught that if you worked hard, managed money properly and took excellent care of your customers that you had a good chance to succeed. But success was never gauranteed. If, however, you failed in any one of these areas your business was gauranteed to fail. If a company ever fails to serve their customers properly, well, the customers SHOULD stop doing business with that company. I was also taught that if you did all the right things running a business and things went sideways anyway, you had to create a new way to succeed or find another line of business to be in. That's much the same way I feel about Big Banking. The government has approved Billions in bail out money to Big Banking. Will they bail out You or me when things don't go well? I don't think so. And what's Big Banking doing with the Billions they've been given? It's a mystery. Now they say they don't have to disclose what they're doing with it. I know what they're NOT doing with it. I know they're NOT lending to businesses that need it. Which begs the question, where's it going? If you're as fed up as I am. Please leave a comment. If you're tired of working hard and paying taxes only to see it go to Big Banking who squanders it and overpays their executives, leave a comment. If you'd like to shed some light on this for me and others, leave a comment. Sorry for the rant, come Monday I'll return to your regularly scheduled programing. Then you'll see the facts of the 4th quarter real estate market in San Jose and I'll show you where the "hot spots" are. Bye for now, I'm going to go watch some football and try to not think of this mess for a couple of hours. -Gary
I never did agree with the thought of the U.S. Governement bailing out private companies. That's not the American Dream I was brought up to believe in (wow, I sound like my dad). I was taught that if you worked hard, managed money properly and took excellent care of your customers that you had a good chance to succeed. But success was never gauranteed. If, however, you failed in any one of these areas your business was gauranteed to fail. If a company ever fails to serve their customers properly, well, the customers SHOULD stop doing business with that company. I was also taught that if you did all the right things running a business and things went sideways anyway, you had to create a new way to succeed or find another line of business to be in. That's much the same way I feel about Big Banking. The government has approved Billions in bail out money to Big Banking. Will they bail out You or me when things don't go well? I don't think so. And what's Big Banking doing with the Billions they've been given? It's a mystery. Now they say they don't have to disclose what they're doing with it. I know what they're NOT doing with it. I know they're NOT lending to businesses that need it. Which begs the question, where's it going? If you're as fed up as I am. Please leave a comment. If you're tired of working hard and paying taxes only to see it go to Big Banking who squanders it and overpays their executives, leave a comment. If you'd like to shed some light on this for me and others, leave a comment. Sorry for the rant, come Monday I'll return to your regularly scheduled programing. Then you'll see the facts of the 4th quarter real estate market in San Jose and I'll show you where the "hot spots" are. Bye for now, I'm going to go watch some football and try to not think of this mess for a couple of hours. -Gary
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