The White Oaks Blog » First-Time Home Buyers

A Great Opportunity in San Carlos: 1412 Howard Avenue

Chuck Gillooley — Sat, 03 Jul 2010 16:10:08 +0000

Great House, Outstanding Value

If you’ve been keeping track of homes that are selling lately in White Oaks and Howard Park, the 3BR/2BA configuration has been the “bread-and-butter” of the sales activity for the past 6 months. This is partly due to the fact that there are so many 3/2′s in the area, but also because of the widespread “cross-over” popularity of this size home. On one hand, it’s very desirable for first-time buyers (especially those with school-age children). But it’s also a great stepping-down point for those who are looking to downsize but still remain in San Carlos. I’ll be posting some prices in the coming weeks that will demonstrate how this surge in demand for 3BR/2BA homes in the flats has pushed pricing up to nearly $1M (and in some cases above) for this hot commodity.

Which brings me to my new listing at 1412 Howard Avenue. It has many of the key features that today’s home-buyers are looking for:

3 bedrooms. Including a master bedroom suite.
Extra permitted room. Ideal for a 4th bedroom or home office.
Updated kitchen. New countertops, cabinets, and appliances.
Beautifully landscaped yard. Newly stained deck, and the property borders the creek in the back!
Extra storage. Both front and back
Outstanding location. Just 2 blocks from Laurel. An easy jaunt to Skinny Sippin’, Flight Lounge, or Refuge.
San Carlos Schools. Of course!

It’s a great opportunity for those families looking to land in San Carlos before the new school year kicks off. And attractively priced at $850,000, it should fit nicely into the budgets of either first-time buyers, or the down-sizers.

Check it Out

Click here to see more pictures of this great home: 1412 Howard Avenue Virtual Tour. The house will be open both Saturday and Sunday this weekend from 1-4 PM. Hope to see you there!

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“Off-Market” Home Sales: Trade-Offs for Sellers, Benefits for Buyers.

Chuck Gillooley — Tue, 06 Apr 2010 23:53:32 +0000

On the Rise

When a home is sold from one party to another without listing that home on the Multiple Listing Service (MLS), it’s what we refer to as an “off-market” sale (it doesn’t matter whether a Realtor is involved in the transaction or not). And while off-market sales still represent a small fraction of the total sales in San Carlos, they happen more often than you might think. Probably the most common example of an off-market sale is when a person sells their home to another family member. For obvious reasons, there’s no reason to list that home on the MLS.

But what about more “traditional” home sales that are conducted off-market? For example, a seller enlists the help of a real estate agent to sell their home (to anyone) – but chooses to keep the listing off the MLS. These types of sales have been on the rise recently, and it may seem perplexing at first blush as to why. After all, why not take advantage of the red-hot market in San Carlos right now by getting as many buyers as possible competing for your home? Multiple offers are back, and some homes are fetching prices 5-10% above list when they go to multiple offers.

The Reasons.

There are many reasons why sellers choose to sell their home off-market, and they’re all very valid reasons. Generally, they fall under three categories:

Privacy. For a variety of reasons, the seller doesn’t want it widely known that they’re selling their home. This happens quite often with very wealthy or famous homeowners in some of the more well-heeled communities. But in this economy, hardship and adversity are more likely the primary reasons why sellers want the sale kept on the quiet. Sellers who are forced to sell their homes due to prolonged unemployment, divorce, or some other hardship may not want to broadcast their problems to their friends and neighbors by putting a “For Sale” sign in their yard.
Convenience. If you’ve sold a home before, you know what a tremendous pain-in-the-butt it can be to get your house ready for sale. Cleaning, de-cluttering, and fixing everything is just the start. Once it’s on the market, you then have to keep the home spotless 24/7, and tolerate countless inconvenient intrusions while agents show your home to prospective buyers. It’s especially tough for those families with young children. And then there’s the broker’s tours and open houses. For some people, the convenience of already having a buyer lined up who is willing to buy the house “as-is” means they can skip much of that process.
Strategic. For some, selling their house off-market is a strategic part of a bigger picture. This is especially true for “move-up” buyers who need to sell their current home before they can purchase their next home. Since they don’t want to end up in “limbo” by selling their current house before they find a replacement (and possibly not having a roof over their head), selling their home off-market may offer some flexibility so they can line up all of the transactions in the same time-line. Another benefit is that having a buyer already locked up for their current home makes the conditional offer on the new home that much more attractive.

Trade-Offs for Sellers Means an Opportunity for Buyers.

Privacy, convenience, or strategic value may come at a cost to the sellers, though. The basic laws of economics state that when you have more people competing for fewer commodities, the value of the commodity goes up. So by forgoing the MLS, off-market sellers will miss the vast majority of possible buyers — and more important, the possibility of multiple offers. Here’s a perfect example: 172 Lyndhurst Avenue in San Carlos just closed escrow today at $950,000 after being listed at $899,888 — a 6.1% premium over list. It fetched that premium for one reason — it had 11 offers. This was a great home, but does it get a 6.1% premium if it’s sold off market? No way.

On flip-side of this argument, if a buyer is lucky enough to find a seller who is willing to sell their home off-market, it enables them side-step that multiple-offer madhouse and possibly latch on to the home they want at a decent price.

Do Your Homework.

There’s an old saying in this business — it’s not the agent or the seller that determines the value of a home; the market determines the value. If you’re considering selling your home off-market, be sure to do your homework and make sure you have a pretty good understanding of what your home is worth in the current market. You won’t be able to distinguish a good offer from a bad one if you don’t. That same advice applies for buyers, too.

And beware of listing agents who are hell-bent on only selling your home to their buyer. I can assure you that in this economy there are agents and brokerages who are far more interested in snagging two commission checks in one transaction by selling your off-market listing in-house…rather than trying to sell your home for the best possible price on the open market.

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Double-Dip Recession? It’s Why Some Buyers Are Still on the Sidelines…

Chuck Gillooley — Mon, 01 Mar 2010 17:37:59 +0000

Waiting out the Market.

Bottom of the market? Economic recovery? That’s not how a growing number of potential home buyers are assessing the current real estate market right now. Despite many indicators that have pointed toward a gradual recovery in 2010, there’s a contrary view that’s starting to gain some footing, and it’s making these buyers and real estate investors nervous: Double-Dip Recession.

What is a Double-Dip Recession?

Investopedia defines a double-dip recession as follows:

“When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.”

While nobody is standing up and saying that we’re heading back into a recession, the news this past week certainly raised questions about the validity of our current “recovery”, as this article from CNBC discusses: Double-Dip Recession Fears Creep Back into the Market. For some home buyers, this specter is enough to keep them on the sidelines, even despite record-low interest rates. Here’s why…

More Inventory, Lower Prices…

There’s no question that the market in San Carlos right now favors the seller. There are simply way more buyers than available listings, and this imbalance has helped keep San Carlos home prices stable. But this imbalance has also been enough to make some buyers put their home purchase on the back burner for the time being. It only takes a couple of multiple-offer losses to take the starch out of anyone’s desire to buy a home.
Those who subscribe to the likelihood of a double-dip recession believe that this event will not only nullify this imbalance, but sway the pendulum back in favor of the buyer. Consequently, they’re willing to wait for the following events to transpire:

Price Drop. Some buyers are reluctant to buy now because they’re afraid their home value may drop in the event of another downturn. It’s a legitimate concern, but also a short-term mindset. The value of everything drops during a recession — housing is no different — so they’re willing wait for a better deal on any house later, than to buy their first choice now.

Inventory Increase. Whether it’s a cause or effect, unemployment and recession are usually joined at the hip. Another extended period of unemployment will simply break the back of many homeowners who are currently struggling to stay afloat. This will increase the number of listings (distressed or otherwise) as people simply give up the fight and move on. Higher inventory means lower prices, and potentially better choices for buyers.

What to Do?

If you’re scratching your head wondering whether it makes sense to jump in now and buy a home, or wait until the direction of the economy becomes more clear, you’re definitely not alone. Banking on another recession happening is a calculated risk — regardless of what happens, there’s a unanimous opinion that interest rates will rise this year, so even if you do hold out for a better deal, it may cost you more to finance it.

In the end, your own personal needs will dictate which direction is right for you. Some people simply need to buy right now, and have a long-term horizon absorb the ebbs and flows of housing prices. Others have the luxury of time, and are willing to wait out the market. But this increasing stand-off will have an interesting impact on the spring market, especially if the specter of another recession lingers.

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Looking for Open Houses in San Carlos? Just Remember “OH”…

Chuck Gillooley — Fri, 19 Feb 2010 23:15:52 +0000

Trouble Finding Open Houses in San Carlos?

For some strange reason, it has always been difficult to find a single website that lists all of the open houses in a particular community for the upcoming weekend. Think of how useful that would be to get an up-to-the-minute list of what homes and condos are open this weekend in San Carlos! Well, now you have it.. Introducing the Open House Link from the White Oaks Blog! or, better known as the “White Oaks Blog OH.”

Just Remember the Letters “OH”…

I’ve always had the “Open House” icon on the right sidebar of the blog, which lists all of the open houses and condos in San Carlos. But what if you’re not on the blog when you need that information? What if you’re already in your car driving around looking for open houses? Well, I have created a VERY easy to remember link that you can punch into any computer or smart phone:

http://WhiteOaksBlog.com/OH

This url is very cool because it’s a “live link“, meaning it’s updated continuously. So as soon as an agent updates their listing on the MLS with new open house hours, they’re automatically captured here — without doing a thing. This is especially useful because some agents forget to post the open house hours on the MLS until the last minute (I have been guilty of that boo-boo myself.)

Once you’re on the page, not only do you see what days and hours the home is scheduled to be open, but you also get all of the listing information on the home, just like you would if you were on the MLS — including pictures!

So check it out — all you have to remember is “WhiteOaksBlog.com” (which you already know because you’re here), and “OH” (for Open House), and you’ve got it! Better yet, just bookmark it on your phone or computer now. You’ll never have to hunt down a list of open houses in San Carlos again.

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“Appraisal” doesn’t mean “Approval” anymore.

Chuck Gillooley — Fri, 19 Feb 2010 13:17:11 +0000

Contingencies

Contingencies are key checkpoints that are inserted into the Residential Purchase Contract to protect the buyer …or more specifically, the buyer’s deposit, in the event that something happens outside of the buyer’s control that prevents the sale from proceeding. And that’s important, because customarily the good faith deposit that the buyer submits with the offer is usually 3% of the purchase price — that’s no small chunk of change on any home in San Carlos!

The most common contingencies that buyers invoke are usually Title, Property Condition, and Finance. The information needed to remove Title and Property Inspection can be obtained in relatively short order — title reports are readily available, and property inspections are usually completed in a matter of days (if you have a good inspector.)

The Final Checkpoint

So that leaves us with the Finance Contingency. Because it typically takes the lender longer to gather the information that they need to approve the loan to fund this purchase, the Finance Contingency is usually the last one to be removed, and consequently the last “safety net” for your hefty deposit check. You’ll notice that a good buyer’s agent will always request a longer removal period for this contingency than all of the others.

So what is a Finance Contingency? The PRDS Residential Purchase Contract defines it as:

“…this contract is made contingent on Buyer’s obtaining a loan commitment for the financing described in Paragraphs 1D and/or 1E, and shall have ___ days from Acceptance within which to remove or otherwise act on said contingency. (Buyer agrees to verify all loan terms directly with Lender prior to removing this contingency.)”

The most important sentence in this entire contingency is the last one. Here’s why…

It Ain’t Over ‘Til It’s Over..

When you are “pre-approved” for a loan, you do most of the work with the bank up front, prior to making an offer on a home. Consequently, when you get a pre-approval letter from the bank and you’re ready to go shopping, there are only a few conditions attached this approval — the biggest of which is that the bank requires a satisfactory appraisal which justifies the purchase amount. This is where things get tricky…

Up until recently, if your prospective home appraised at the sales price (or high enough to get the loan you committed to), you were done. It was safe at that point to remove the Finance Contingency, because the loan approval was a rubber stamp after that. But that’s not the case anymore.

Lenders can no longer conduct their own appraisals — new laws require them to outsource this key function to Appraisal Management Companies that are not affiliated with the bank. This means the bank will usually have their underwriters scrutinize the appraisal once they get it back from the AMC, even if the appraisal justifies the offer price. If that underwriter finds anything amiss in the appraisal — i.e. not enough comparable homes, inconsistent remarks, or they outright challenge the valuation — it can get kicked back for further review and possible re-appraisal. Thankfully this only happens in a minority of the cases, but it is happening with increasing frequency.

But this serves as a perfect reminder that your loan isn’t approved when the appraisal is completed — your loan is approved when the lender tells you they have approved your loan. (Did you notice that the word “appraisal” isn’t even in the definition of the Finance Contingency?)

In other words, it ain’t over til it’s over.

Protect Yourself

For buyers, the Finance Contingency is often the last checkpoint to protect your deposit check. You can see the pickle you can get yourself into if you rush to remove your Finance Contingency as soon as you hear that the home appraised at your offer price. In today’s market, wait an extra day or so until the lender approves the entire loan package (including the appraisal) and is ready to issue loan documents to the title company before you remove that last safeguard. Don’t be pressured into doing it sooner simply because your contingency removal deadline is approaching. A good agent will first ask for an extension of the deadline in advance of the deadline of this contingency if he or she senses that there could be a delay — any reasonable seller will usually grant this, since the delay is out of the buyer’s control.

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San Carlos First-Time HomeBuyer’s Tip: Kick Off Your Shoes…

Chuck Gillooley — Sat, 23 Jan 2010 01:49:15 +0000

Shoes Off!

As you put together the list of open houses that you’re going to see this weekend, make sure you also plan on wearing shoes that are easy to slip in and out of. Why? Because with all of the rain we’re getting this week, you’ll likely be asked to remove your shoes before entering an open house to prevent tracking dirt and mud into the home. That’s certainly understandable, since the owners probably went through considerable effort to make the home look its absolute best.

After about a dozen times of doing this (like we do on broker’s tour), you’ll probably start to resent the inconvenience, especially if you didn’t heed my advice above about the shoes. But I’m going to convince you that when they ask you to remove your shoes, they’re actually doing you a favor — because it’s one of the smartest things you can do as a buyer.

The “Sock Tour.”

One recommendation that I make to my clients, once they become interested in a particular home, is to take another walk through the house — but this time in their socks. I know it sounds a little strange, but you wouldn’t believe the things your feet will tell you about the condition of the floors, and possibly the foundation — things you may miss if you have your shoes on.

Here are some of the things you may notice, especially hardwood floors:

Sloping or uneven floors. We have an uncanny sense of balance, and you can sense almost immediately if floor is not level. Your bare feet will also pick up on dips or ridges in the floor, which could be indications of foundation settling.
Cupped floorboards. When hardwood floors start to “cup” instead of laying flat, it’s usually because there’s moisture underneath. Severe cupping is usually easy spot visually, but more subtle cases are not. Your feet will pick up on it right away.
Sagging or squeaking floors. Also an indication of foundation settlement, the sagging and/or squeaking occurs when there’s a gap between the foundation and the sub-flooring.

Shoes are designed to isolate and protect your feet from outside sensations, but this is one situation where you want your feet as tuned in as possible … So next time you’re trekking through an open house, kick off your shoes and listen to what your feet have to tell you.

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