1. Types of homes. Choose the type of home that is the most appealing yet practical for you. In addition to single family homes, there are townhouses, multi-family homes and condominiums. Multi-family homes are often good for first time home buying because they can have rental income to help with their mortgage.

2. Budget and investment considerations. Find a balance between your needs and wants and your budget. Decide whether you should buy older home or a “fixer-upper”. In our area there are very few newly constructed homes to select from.  If you know you will sell your home in the future, the following are best for re-sell value:

• Homes with 3 or more bedrooms; condos with 2 or more
• Homes with “curb appeal” always sell best
• Homes that are NOT unusual or unique and not the most expensive on the block
• Homes in top school districts

3. While house-hunting you will probably look at many homes for sale, so keep careful and complete notes and compare.

4. When you finally find your dream home, don’t hesitate! If you snooze, you may lose!

The answer is maybe the deal will be a good buy and then again, maybe not.  Here’s the reason why I say this.  If a property is being sold as a Short Sale it means that the loan on the property is for more money than the property can be sold for.  There is a shortage of funds due the lender.  Sometimes a lender will forgive this amount and sometimes it will not.  If the amount is forgiven it may not be a win for the seller because they may have to show this amount “forgiven” as income in their taxes the following year.  It must be shown as income because it was money that was owed by the seller through a note to buy the property, but not paid back to the lender and the IRS looks at this as money in your pocket even though you never see the money.  Update:  The IRS has put a hiatus on the tax due for a short sale in order to assist sellers.  This may not last forever but it is helping them today.

A Short Sale may save the home owner from going into foreclosure but there are potentially major tax consequences in doing one.  If you are a buyer looking for a deal is this the way to find one?  Maybe if the price being asked for the property is  where it should be in the market.  If the seller is trying to break even, pay off his loan, pay the commissions to the Realtors involved in the transaction, and then move on the price might be “at market”.  But if the market today says the property is over priced, it sits and sits and sits.  Sometimes we see these properties have been listed for hundreds of days and with no appreciable price reduction.  If the seller is truly anxious to sell, they aren’t reducing the price right way unless they are working with an agent who is specifically trained in foreclosure and short sale, like Alex, a CDPE.  If you need to sell you need to price aggressively and be willing to take the hit in order to get out from under.

Selling a home prior to it going into foreclosure when it is worth more than the loans on it involves a lot of steps and isn’t easy to do.  One has to swallow their pride and talk to the lender about their situation, follow every step the lender requires and price the home aggressively in order to sell it.  Many people do the first part but forget to do the latter part, the price aggressively part. You need an attorney and accountant as a part of your team.  You must follow every step you are told to or you’ll find a foreclosure on your credit record and that’s a 5 year hit.  A short sale is only a maximum of a 2 year hit and sometimes even less than that.  Think about it, which would you rather have on your credit report?  Your FICO score drops about 50 points with a Short Sale and 150+ with a foreclosure.

Buying a property during a Short Sale could also mean that you also buy past-due taxes owed by the seller and any other liens that might be placed on the property such as homeowner association fees that are past due.  In effect, you get it all — the good, the bad, and the ugly.

Around San Mateo County, for some reason we haven’t been seeing a lot of aggressively priced listings so these short sales sit and sit. We know there are a great number of homes close to default and these homes should be put on the market but when is the $64,000 question.  People are afraid to face the inevitable and unfortunately it’s often human nature not to do what is necessary before it becomes a panic.  A CDPE Realtor, like Alex Wilkas, can help facilitate the many steps necessary to price a home and get it sold.

Truthfully there is about a year’s gap between a buyer and a seller’s understanding on what’s happening in the real estate today.  Buyers are always ahead of the curve because they are out there looking at property a lot and they begin to see the pricing trends way before sellers do.  Sellers only see what their neighbor sold their home for and they want to sell for that same amount, or more and what the news is telling them.  They’re looking in the past not in the future, or even at today.  That past could be six months ago or longer.  They don’t understand what is happening to the market today unless they are actively out there looking to buy, and when they do figure it out they may find their mortgage is for more money than they could sell their home for today.  They are then  “underwater” because they owe the bank more than what their home is currently worth.  Is this bad?  Yes if you can’t afford the payments and can’t refinance to bring them down to where you can afford them.  It’s not bad if you went into your home with a fixed rate loan and you don’t plan on moving any time soon.  You keep on making those payments and hopefully by the time you are ready to sell your equity has moved back into a positive position.

The biggest issue in looking at buying a short sale is understanding that you may not get the property you place an offer on and the reason is complex.  Generally most lenders are huge operations with thousands of loans in their portfolios.  If some of those properties are “underwater” the lender isn’t concerned about this as long as the payments are current.  They do become concerned when the homeowner stops making those payments.  After several months the lender issues a Notice of Default to the owner and tells them they have a certain period of time to pay up what is owed or the property will be foreclosed upon.  How long this takes depends on the lender.  It is during this period of Notice of Default that one begins to see a home listed as a Short Sale.

The banks generally have several departments that handle these properties and if after a length of time the home has not been sold, it is bundled up along with hundreds of other properties and placed on a Notice of Trustee Sale notice where these properties are auctioned off, and yes it happens on the steps of the San Mateo County Court House in Redwood City.

You might be in escrow to buy one of these properties, but only one half of the bank knows this and if the other half decides to sell the place off and the Notice of Trustee Sale takes place, you lose your prospective home.  You do not lose your deposits but you have, in effect, wasted a lot of time trying to buy something at what you hoped was under market.  If you are willing to wait it out, and if the house you hope to buy doesn’t have a lot of mortgages against it, you will get a great buy.  Patience is a virtue and this is one you want to make sure you have.

San Mateo, the second largest city in the county, had 103 Condos and Townhouses for sale last week, and believe it or not, this is a reduction from previous weeks.  The Median Price was $450,000.  The Average Price was $552,510 with the least expensive unit priced at $238,000 (a steal of a price for a condo) and the most expensive was $2,050,000 topping anything for sale in single family homes last week. It’s taking longer and longer to sell what is referred to as a Class-2 property (Condo, townhouse, TIC), which is now 134 days.  Almost half of all listings have seen price reductions and we are seeing quite a few Short Sales and Bank Owned REO’s as well.  We are sitting in a Cold! Buyer’s Market and have been there for a while.

The median sized condo in San Mateo has 2 bedrooms, 2 bathrooms is around 1100 square feet and is about 27 years old.

Unlike the single family homes Quartiles, these don’t necessarily fall into different zip codes. There are condos and townhouses in every zip code in San Mateo.  The Higher end condos, often the newest or in the some of the nicest areas are larger, were built only to be condos and not converted from apartments, and appear to be selling a little faster than the other Quartiles.

I am asked whether the market has hit bottom yet and you can get an idea of a market by looking at the Median Prices over time.  We are looking at a 2 year picture here, from the peak of the market in early spring 2007 until last week.  Prices have hit bottom.  They are back to 2002 levels and  with some of the amazing loan packages finally coming out, you can buy some great properties for yourself, your family or for investment with a POSITIVE CASH FLOW.

Our research comes from Altos Research and they have developed a way to track the supply and demand of real estate including market conditions.  This Index spells out the balance between a Seller’s Market and a Buyer’s Market.  The use the index of 30 to bridge the gap and we have been in a Buyer’s Market in San Mateo for condos for a very long time.  Right now it stands at 17, for a Cold! Buyer’s Market.

94404

This zip code is shared by Foster City but the small part of San Mateo that has properties within it are almost entirely what we call Class 2 – Condos and Townhouses.

These condos are east of 101 in Mariner’s Island, Edgewater Isle and Harbor Town.  They are mostly around  29 years old, in very nicely kept complexes with nice amenities.  The townhouses there are deeded condo as the unit does not own the land it is sitting on.   The Median Price is $559,995, and the  Average Price is $563,526. These are mostly 2 bedrooms and 2 baths, usually have fireplaces, and some even have water views.  It’s taking over 100 days to sell most of them, which is an increase from previous weeks.  Nothing sold last week and there were 15 listings.  Altos Research places this Zip Code as a Cold!Buyer’s Market at 10, making this the worst performing area in San Mateo.

The 94404 zip hit bottom early last year and has been juggling around the middle $500,000′s for a couple of months.  The peak of the market in this zip was around March of 2007.

The picture of the supply and demand of the 94404 zip for Condos is pretty amazing and indicates that there are many more condos for sale in this zip code then there are buyers right now.  What an opportunity for Investors!

94403

This zip is primarily the southern part of San Mateo, with some condos in Los Prados – where the least expensive units sit (these were converted from apartments in the 1980′s).  West of 101, there are a bunch of newer units near Bay Meadows, near City Hall, and many up in the hills and in the Highlands.  The Median Price last week was $366,500.  The Average Price was $384,259 and the least expensive was $250,000 and most expensive $639,000.  It’s taking longer to sell condos in this zip and there were 20 for sale last week and only 2 were either sold, canceled, withdrawn or had expired listing agreements.

When you look at the chart for the Median Price of condos in 94403 like every where else, prices have gone down. There was an up tic last week, perhaps due to the sale of the two condos?

The two charts that will give you a real picture of a real estate market are the Median Price and the Market Action Index.  The Market Action Index has held consistent around 20 for about 18 months.  Some week it’s up a little, the next week it’s down a little but this Zip Code is steady at 18 right now.  There are several months of inventory here to select from and not too many Short Sales or Bank Owned REO’s, yet.

94402

This zip, 94402, falls into the higher priced part of town so it’s expected that the Median Price will be higher and it was $758,500 last week.  Average price was lower, which is unusal for sure, at $754,140.  The least expensive unit in 94402 was $349,000 and most expensive was $950,000.  The majority of condos in this zip are in the Baywood area right near the Library on 3rd Avenue, 4th Avenue and 5th Avenue.  And south toward Highway 92 skirting El Camino Real.  Townhouses are tucked into side streets.  We have seen several new developments here, too.  Median size for these condos is 3 bedrooms and 2 baths.  They’re larger at a median near 1700 square feet.  Many of the complexes in 94402 attract Empty Nester’s, downsizing from Hillsborough homes.  This zip attracts the most interest in the City of San Mateo.

Looking at the chart for the Median Price for 94402 you get the impression the bottom fell out of the market last January, 2008, with such a dramatic drop.  Some of the reasons were there had been a new high end development that sold out late 2007 and everything else coming on the market was priced dramatically lower.  It sure makes for an exciting chart,though, but as you can see 2008 was pretty steady price wise until 4th Quarter and prices rose.  It really only takes a couple of listings and sales above the median to make such a difference, too.  When the inventory is only 18 units for sale, and only 2 sold last week, you can see why this happens.

This is why you need to look at both the Market Action Index and the Median price to get a true picture of the 94402 condo market.  Right now, this zip code stands as a Cool Buyer’s Market at 20. We havent’ seen a Cool Market in a long time!  The average length of time condos are listed is dropping, the median price is dropping and people are out there buying.

94401

What makes things so interesting when writing about this market by zip code is when I get to the 94401 zip.  When it comes to houses, it’s in the tank, but when I come to Condo’s, it’s not quite drowning.  This area covers downtown San Mateo where several senior condo developments sit, one very high end condo sits and lots of townhouses and Woodlake sits.  There is a huge cross section of property in the 94401 zip.  The Median price last week was $434,500 and it was rising.  The Average Price was $543,919.  The least expensive condo was $238,000 and the most expensive was $2,050,000.  There are currently 50 lisitings and only 2 were either sold, or otherwise removed from the market.  The Median age for a condo on this side of town is 25 years old and it’s likely to be 2 bedrooms and 1 bath, making it on the smaller side at around 1000 square feet.  That’s median size.  The $2 million dollar place is huge with views and is only a couple of years old. Almost half of all the Class 2 listings in San Mateo were found in the 94401 zip code.

Median Price is on a downward trend, but bottom was hit around the first of the year and we’re bounching upward now.  But we need to look further to get a better picture of the market for 94401.

Here’s the rest of the story.  The Market Action Index for Class 2 Condos and Townhouses in 94401 is at 14.  It’s not the lowest in the city but it’s low and considered a Cold! Buyer’s Market.  This area has great investment property and if you’re looking to invest here’s the place.  There are loads of condos to look at and select from.  This zip also has seen many Short Sales and Bank Owned REO’s as previous buyers, timing the market at it’s high, bought with no money down and loans that would reset within 2 or 3 years.

That’s the story for San Mateo.  If you’d like to see a full report please email us or call at 650-696-2820.

Once your offer has been accepted by the seller, your good faith deposit check is deposited into an escrow
account.  The Escrow company is the holder of all funds that you must deposit prior to the close of the escrow and the recording of your new home.  They really are a neutral third party between you and
the seller and they take their instructions from you, the buyer, and the seller sometimes directly from you both, and sometimes from your agents.

When it comes time to sign your loan documents and deed the signing takes place at the Title & Escrow
Company, which are combined entities in Northern California.  We make an appointment for the signing and are there with you and your loan officer and are there to make sure everything is correct.  Once you’ve signed your documents the recording of the deed generally takes place about 48 hours later.  The signing is really determined by your lender and when they have drawn up the loan documents and sent them to the Escrow company for review.

In San Mateo County, recordings of new sales generally takes place first thing in the morning and we
generally receive a call from the Escrow company to tell us “You are on record!”  The next call is to you with congratulations on the purchase of your new home.  At that time you can get the keys to your new home and make it all yours.

The reason I have specified that Northern California does things a specific way is because Southern
California works differently that we do.  They have separate Escrow Companies and Title Companies.  San Mateo County uses a different contract that most of the state as well.  For some reason, the Bay Area, and specifically Marin County, San Francisco County and San Mateo/Santa Clara Counties each have their own
contracts.  They are each similar to the statewide contract but we like to be different here.

We are looking at a mortgage industry today that is beginning to operating the way it used to in days long

Running on a treadmill

ago.  Once upon a time you needed to have a down payment of at least 20% and a debt ratio of no more than than 36%.  In our area that is very hard to come by today unless your options are ready to cash in.  So you might have the cash but don’t have the debt ratio.  Or perhaps it’s the other way around.  Our housing prices aren’t dropping at the high end so if you are trying to save you might feel like you’re on a treadmill that is just a little behind the increase in pricing.  If you’re looking to buy an entry level house there is plenty to pick from and negotiate price over.  But that doesn’t change the need for 20% cash for your down payment.

What to do?  If your parents are financially able, they can each gift you (and your spouse) $11,000 every year and it is tax free. Since we’re nearing the end of the year, a gift like that could instantly give you both $44,000 in cash towards that 20% down in this year, plus another $44,000 tax free in January.  That’s $88,000 between now and the beginning of January.  Okay, how did I get that number?  Mom gifts you and your spouse $11,000 each. That equals $22,000.  Dad does the same.  That now equals $44,000.  Do it anytime between now and December 25 because the check must be cashed prior to December 31.  They repeat this again on January 1 and voila, $88,000.  If you are lucky enough to have both sets of parents financially able to do the same thing,  you can do the math.

Money, money, money

Add that tax free gift from your parents to any other funds you have and
you just might have found yourself with 20% of the price of a new home.  This is something your parents can do annually if they have the income.  The donor gets no income tax deduction and the recipient, you, pay no taxes on the money.  Want more information on this?  Marc Weissman, a Certified Specialist in Estate Planning, Trust and Probate Law can provide it.  You can read more
about this here.

Danger!

If you are fairly new to buying and selling real estate, meaning you
entered the real estate market this decade, you are probably unfamiliar
with the term Points.  Points are unique to our country, no where
else in the world is the buyer offered the opportunity to buy down
their interest rate.  But in the USA, our banking institutions are
always trying to figure out ways to make more money on us, and points
is one way to do it.  Oops, do I sound cynical?  Perhaps I
am.

What are Points?
They are fees a borrower pays to the lender to get a lower interest rate.  The good news is they are tax deductible.  The bad news is they are up front fees you must pay in cash, should you want to “buy down your loan”.

Is this something you should do?
It depends on many things, but is whether you plan to be living in your new home for a while. Now I know
it is something hard to know that when you buy a house, but try to  project what your life will be like in the next 5 years and if you think you might still be living in the house then it might be worth
considering.

Why are there so many combinations of points?
There is a menu of options for prime buyers, those with cash in the bank.  If you only have enough cash
to bring to the closing and then the coffers are bare, points aren’t an option for you.  If you have money in the bank, and it won’t all go to the escrow office in order to close that escrow, then ask about the menu of points available.  Once you see what the banks offer you can decide if it’s worth taking the cash out before the purchase or using that cash for other things.

The payment of points is like an investment in your future.
If you will be living in your new home for many years to come you will save on the interest rate of your loan
and because of this savings you should consider this an investment in your future.  It only works if you stay put and keep that loan for a lengthy period of time.  If you decide to refinance in the future, the savings you thought you were getting will evaporate.

We are in an interesting time for mortgage ending.  Take your time and evaluate everything your lender provides you.  If you want to see what your rate of return might be check this calculator out and then decide what is best for you.  The pressure of multiple offers is generally over today so you can stop, think and evaluate.

I have told my clients for years that the process of searching for your new home is very similar to the time they were or are courting for a mate.  You go through a lot of dogs befor

Tuesday is our Broker Tour Day and we go look at as many houses as we can cram into 3 hours.  Sometimes that’s hard, other times it’s easy.  Today we saw some real dogs and the prices being asked were high.  We also saw a couple of real gems.  It’s the end of August and we are seeing a few more new listings come on than is usual for late August.  The San Mateo area generally has a shortage of homes to select from, and it still is the case for the areas I’m scouting for my clients.  Because of this prices are not coming down.

If you are coming into the real estate market looking to buy in the San Mateo area don’t expect bargains. They are not here.  We are still a seller’s market.  I’ll post more data on that beginning tomorrow with the most recent Altos reports from last week.  If you want to live in San Mateo County, you will pay the price.

You’re courting for a new house.  You don’t want a dog do you?  If not, you need the help of an expert at moving around dogs and finding

gems.  Call us.  650-696-2820.

We spend time designing brochures for marketing, we design web ads, we submit advertising in print (and pay for all of it), we hold open houses for brokers and the public.  We help price a home not only
by using the usual tools that all agents have, but with knowledge of the specific market the home is in because we are there selling in the area  daily.  We know the history of areas, the best schools,
the best plumbers, the best painters, the community.  How can a Virtual agent with Redfin who may be sitting in our case in San Francisco and selling houses all over the bay area represent their client to the best?  We are seasoned agents working within offices of seasoned agents.  We understand our market.  Redfin, a Seattle based company who is opening up offices in cities around the country will hire agents who can’t possibly provide local information in large metro areas.  There are too many regions to be an expert
in, and when one sells in areas they’re unfamiliar with, they open their clients up to potential litigation.

Now, what happens if you are buying a house and decide to use Redfin as your real estate company of choice?  They make you do all of the leg work.  Then they say they’ll kick back commission to you.
Super, but what happens if the property has been listed for 4.5% or 2.25% for seller and 2.25% for buyer side?  Do you expect to see a huge amount back to you?  I don’t think so.  And, who will make sure that you understand the disclosure package and walk you through the property with that disclosure?  Who will be there for the final walk-through?  Who will be there at the closing?  Does the Virtual agent come to you for anything?

Our area is full of agents who have strong tech backgrounds and we work with clients who work in the tech industry.  We are there 24/7 for them.  We can meet them and show them property.  We can talk
about areas.  We can talk about commutes.  We can help direct a client to the right location for them, one that will provide them with the kind of lifestyle they’re looking for.  Buying a house around here is a huge commitment and doing it only online, and then being told to do the heavy lifting on your own is a dangerous
proposition.  Will Redfin be there when you get sued by the buyer of your house because you didn’t disclose something?  Will they have the deep pockets to protect you?  Are they being run by people who understand real estate?

By the way, a commission on a house is split four ways, not two ways.  Let’s use the norm here on the Peninsula, 5%. Out of this commission, 2.5% goes to the listing brokerage and 2.5% to the selling
brokerage.  The agents work on splits and they receive a percentage of the commission.  Out of this split they must pay E&O insurance (Errors & Omissions Insurance is paid to make sure we are covered in the remote case we are sued), office expenses, selling expenses and any other fees that may come out.  So, use a full commission of $20,000, split 50/50, $10,000 goes to the selling broker and $10,000 to the listing broker.  The agents split varies depending on experience and the number of transactions they produce, so
let’s say one is at 60% split and the other at 70%.  One will see $6000 gross and the other will see $7000 gross.  Deduct fees of about 15-25% and you begin to see what someone makes on the deal.  Not much.

Is Redfin the place for you?  Only you can decide. If you want totake on the responsibility of finding the property, reading the disclosures and trying to understand them, not knowing if you need to have additional inspections, finding your own lender and hope they’re honest, finding yourself at the signing sitting alone across from the escrow officer who may know what they’re doing, or then again, may not.  Go for it.   We offer personal and professional service to our clients. They don’t.  We try to protect our clients from shaky deals, provide information about the community they want to live in and are there after the sale.  We know which properties have issues.  We hear of listings before they hit the market, and we can often present offers in person to the seller, before Refin has even seen the listing.  We’re in the street every day, they’re in
their seat in their office.  What’s best for you?

Last by not least, Redfin has had 20 listings in our MLS, Reil.com, 5 have sold, 4 pending, 2 active, 8 cancelled and 1 expired. I know they haven’t been in our area very long, but those aren’t very good stats in my book.  One of those cancelled listings was relisted by a Cashin agent and sold in 11 days.

What makes a Gen X buyer different than anyone else?  In my book, nothing.  My kids are Gen Xers.   I tell my clients if I think a property isn’t a good buy for them and if it isn’t something I would want my own kids to live in I won’t want them to buy it either.   I tell my clients the same things I would tell my own kids.  Ultimately my word and reputation is on the line here and I pride myself in taking good care of our clients.

So, my question goes back to why should I work differently with someone in the Gen X category?  I use the web, email and am pretty tech savvy for an old dame.  After all, I’m blogging this commentary, aren’t I?  On the other hand, working with someone my own age, or older (and I won’t say how old I am, just that I have 2 grandsons) often means less use of technology and more use of the phone.  But other than that, I service clients the same way.

My expertise is San Francisco Peninsula real estate.  I know San Francisco, I know the East Bay, I know the South Bay, but I prefer to stay within San Mateo county and just into Santa Clara county down to Mountain View.  That’s my territory.  There are a lot of places to know within that territory.  If I want a client to feel I am an expert — a maven or mavin like my license plate says, then I need to keep to specifics.  I need to know what’s going on in specific communities.  How good the schools are.  Whether the weather is good, bad or perfect.  I know that’s subjective, but give me a break here.  I need to know where you work so I can suggest the best way to get there from your prospective home.  It is impossible to be a know-it-all for every where so select someone you feel comfortable with.  Because you will be in close contact with me before, during and hopefully even after your home purchase.

We like to give a little extra to those we work with.  Whether you’re a first timer or have bought and sold multiple times, we provide things that other agents don’t.  Curious?  Ask me.