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.

For Sale

Is  this you?  Your house has been on the market for two and one half months.  You’ve been a good member of the Clean Counter Club but it’s getting harder and harder to do it everyday.  Days get interrupted.  Dinners are interrupted.  Saturday open houses.  Sunday open houses.  Keeping the house picked up is a chore.  Keeping the toys off the floor is almost impossible now.  Keep the kids clean?  It’s summer and oh, so impossible to do!   Is the laundry done?  Forget it.   The newscasters keep saying the real estate market has slowed to a trickle but appears to be rebounding.  But where, it doesn’t appear to be happening here in Burlingame.   You’re worried you home won’t sell.   And then….

Your Agent calls you one night and says,  “We have an offer coming in.”   He calls again in the morning and says,  “We are getting a second offer.”  You’re very excited.  Two offers!  Then he tells you that he wants the offers faxed into his office so he can select the best one of the two, and then he’ll come over and show it to you.  This is a RED FLAG Warning! Stop.  Do Not Pass Go. Do not let your agent do this.  This is why.

A Buyer’s Agent has a fiduciary duty to her client to present their offer to the seller in person. That way the Agent can tell you, the seller, about her clients, about what their offer is, and to be there to negotiate the best deal possible for you and her client.  A Listing Agent who does not want to have the other agent present their offer to you in person could be trying to hide something.  It might be financial or it might be insecurity in showing you how poor they are in negotiating.  It makes no difference.  It’s bad for you. And that agent might be in violation of the National Association of Realtors ethics rules.

In our area part of our offer consists of an Agency Agreement and the Contract.  Prior to presenting the contract we present the Agency Agreement that has been signed by our Buyers and me, their agent.  At the time I present an offer I sign this agreement, date it, put the time I am presenting this offer to you, the seller and  I then ask you to sign, date, and place the time you are hearing my presentation.  Our contract also has a place for you to sign a rejection of my offer, should you do so.

If the Listing Agent either refuses to let me present my offer directly to you, or is unable to do this because you are not in the immediate area, I try to present to him in person.  I sign the Agency, date it and time it and expect to receive it back with the Seller’s signature, date and time.  I need this back whether or not we prevail with the contract.  I can not tell you how many times I have had to call and call and call and beg to receive my Agency and Contract returned to me because they refused to let me present to their clients in person.  I am required to have these two documents for my files and to show my Buyer’s that I have, indeed, presented their offer.

So, Dear Seller, don’t let your Listing Agent suggest that you don’t need to have a face-to-face presentation and listen to  any of the offers that the Buyer’s Agents bring to you.  In fact, if the prospective buyers come along, don’t be afraid to meet them and listen to their story.  You might find that they are very much like you and just the people you would like to buy your home.  And even if they are not, you will know that you’ve done the right thing.

Remember selling your house is a financial decision and you need to treat it like one.  After all, we all want the same thing for you and that’s to see a Sold sign in front of your home.

Millbrae, CA

The city is named for Darius Ogden Mills, a rich financier who founded the Bank of California and bought land from the Sanchez family to build his country estate.  The Scott’s refer to a “brea” as rolling hills, and Mills turned into Millbrae at some time in the late 1800’s.  The Mills estate went from Skyline Boulevard down to Bayshore Highway, now 101 and 280, east and west and from Millbrae Avenue south to Trousdale Drive  There were multiple lakes at one time, with the largest where the football field for Mills High School now sits. The mansion burned down in the early 1950’s.

Mills also owned the land where Mills Field stood, the first airport.  It had been a dairy farm and was converted to an airport.  San Francisco International Airport still sits on part of the original land.

The city has about 30,000 residents today.  Some of the areas of the city were developed after WWI, and in 1927 the Highlands, homes built for the upper market above the downtown area between Chadbourne Avenue and Taylor Boulevard, Magnolia Avenue and Ashton, was developed.  The area is known today for its beautiful tree lined streets and Spanish style homes.

After WWII, the town began to grow and more houses were built in the northern part of the city.  The
Mills Estate was developed in the mid-1950’s through 1970’s for the upper market.

The downtown is a bustling street with many restaurants and shops.  Millbrae’s schools are considered
excellent.  Mills High School is a top ranking school.  Weather is moderate, and the hills do a good job of keeping the fog away from the main part of town.

The BART station and CalTrain station are a major transit hub.  Millbrae, sitting across from SFO has many residents who work in San Mateo County, or up in San Francisco.

Altos Research has placed all of our 7 cities, Millbrae, Burlingame, Hillsborough, San Mateo, Foster City, Belmont and San Carlos in the Cool Buyer’s Market Action Index.  I wrote about this last month so if you’re following this you shouldn’t be surprised.  So what does this mean for a buyer – or – the seller, for that matter?  Does it mean there are great bargains out there?  Yes and no.  Yes if you’re looking at entry level
property, both single family homes and condos or townhouses.

Foster City, a planned community with many condos and townhouses is showing prices holding steady and has a median price for a condo or townhouse of $640,000 and there were 47 of them for sale last week.  The average days on the market are climbing and it’s 61 days.  No surprise on that because that’s normal at year end.  Foster City’s Market Action is a 22.  San Mateo, too, has many condos and townhouses and we’re seeing prices trending upward to a median price of $589,000, but so are the average days on the market, 82 days and there are 149 of them for sale. Their Market Action Index sits at 20. If you would like to see the reports on this, let me know and I’ll email one to you.

As for single family houses, the weakest Market Action Index is Millbrae, sitting at a 20.  Prices are steady with a median price of $1,088,000 and the average days on the market are climbing upwards to 66 days and there were 56 houses for sale in Millbrae last week.

Burlingame ties San Mateo at being the next weakest with a Market Action Index of 21.  Prices are trending downward in Burlingame, but last week’s median price was $1,373,500.  There were 60 houses for sale and the average number of days on the market were moving downward to 72.

San Mateo also sits at a 21 for their Market Action Index.  As San Mateo is the largest city here, and has the biggest variety of single family homes, the median price was $799,000 but the most expensive house is listed at $1,998,000.  There were 154 houses for sale with an average of days on market of 76, and that’s moving upward.

San Carlos sits with a Market Action Index of 22 and a median price of $1,058,000.  There are 45 houses for sale and the average days on the market is 84 and climbing.

Next comes Hillsborough and their Market Action Index of 23, which is an improvement over the past couple of weeks.  The median price for a home is $3,299,000 but it sees a high average number of days on the market of 120, and that’s climbing up. There are only 37 houses for sale at this time.  Prices have
been trending downward in Hillsborough for a while and if you’re looking in the marketplace you can negotiate some good deals.

Belmont sits at 24 for Market Action and has a median price of $949,000.  Average days on the market is 62 and climbing and there were 49 houses for sale last week and more coming on the market.  Prices have been holding flat in Belmont.

Finally, Foster City, with the lowest number of houses for sale at 16, and an average of 50 days on the market and dropping, sits with a Market Action Index of 25 and a
median price for a house of $1,219,388.

The Market Action Index reflects Altos Research’s calculation of the available supply relative to the current level of demand in housing.  Index values above 30 indicate conditions favoring the seller with a Seller’s Market and below favoring the buyer.  The more you drop below 30 the more into a Buyer’s Market you go.  None of our cities are much below with the exception of San Mateo zip code 94401 where the majority of entry level houses sit.

Comparing Altos Research data to the data I used the other day from MLS Listings, our local MLS shows some differences and some similarities.  Altos Research measures the market weekly, MLS Listings does it monthly and does not drill down into zip codes.  I have all of the data available to you should you wish to see it, just ask.

December is a great time to be looking for a new home . There are some great houses for sale and as they sit on the market the seller’s become more open to negotiation on price.  This is the time you need to use a smart Realtor with experience in negotiation and one who understands this kind of market.  We are here to help you with all of your real estate needs.

I was surprised to learn that the State of California has a streets and highways program that places the burden of ownership on the homeowner who has the tree in front of their house.  It matters not whether you planted it or the city planted it, it’s your problem if the tree buckles the sidewalk causing a tripping hazard.

In Burlingame, where this is a huge issue, the city inspects every street annually and notifies homeowners of problems.  Of course, the homeowner probably already knows about the problem since it’s in front of their house, but until the bill to repair the sidewalk arrives, the homeowner likely didn’t know it was their problem to repair.  The usual cost for repair runs around $600.

Believe it or not, your tree is located on what is called ” the city right of way” and the California Streets and Highway Code says this land really belongs to the city and the street.  You water it, you mow if there’s grass on it, and you take care of it, but it isn’t your land, it’s the city’s.

This issue is the same for many other San Mateo County cities including Millbrae, Foster City, Belmont and San Carlos.  Don’t throw the bill away should one come because the city means business and if you don’t repair the sidewalk they will and  you will see the bill on your next tax bill.

The California Department of Transportation (Caltrans) announced that the U.S. 101 Auxiliary Lanes Project will close pedestrian access at the Peninsula Avenue overcrossing to Coyote Point to reconstruct the current structure. The closure will be in place beginning May 29, 2007 until further notice. Motorists will have access across the structure while pedestrians will not be allowed.

Beginning June 15, 2007 the Monte Diablo Avenue bicycle/pedestrian overcrossing will be demolished. The overcrossing will be demolished and rebuilt between June 15, 2007 and August 15, 2007. Shuttle service
will be provided. The schedule is being determined.

They began in Palo Alto although they’re now in Redwood Shores, and their initial reach  was within InfoLink’s region, the joint Boards of Realtors from San Mateo, Santa Clara, Santa Cruz, San Benito and Monterey counties.  They then moved into San Francisco and on to the east bay with Alameda and Contra Costa boards. Next, they’re marching south to LA, Orange county, and the Inland Empire.  From there, the rest of California and on to the east coast.

Eric Orland, Vice President of Sales only works with the best of the best agents.  These agents are trained by him on how Movoto works, and receive pre-screened and pre-qualified leads.  He wants Movoto to become a Referral Provider to his agents.  In turn, the agents give a referral fee to Movoto.  They’re beginning to see some revenue, too.

What sets Movoto apart from the rest of the pack?  In my opinion, a slick website, great links to information a buyer or seller wants, and the opportunity to talk to an agent when they are ready — on their own timetable.  Sure you must register if you want to use the service and give your information and you’re left alone.  But once you, the buyer or seller, pulls the trigger to say you are ready to rock ‘n roll, Movoto is in personal contact with you and promises that you will hear from your assigned agent within 5 minutes of your conversation with them.  Yes, I said 5 minutes.  (Obviously this is only during reasonable hours – between 9 AM and 7 PM and on weekends.) They promise Customer Service and the Movoto client, gets what Movoto promises.

I know this because we are Movoto agents and have been with them from the beginning of their live site.  Check Movoto out and compare them to the others and let me know what you think.  I think you’ll be impressed.  Movoto’s business model isn’t like Redfin’s, or Trulia’s or Zip Realty’s.   I think they’re onto something that is more user friendly for both the end users — the general public or agents.  Agent’s don’t need to register with them and feed them listing information because they already have it once it’s entered into the MLS.  My clients love it so much I can’t get them to move to our new site to use our new systems by Clean Offer — another great provider of search.