Absolutely Foster City Blog

For several years it’s been a common event in this area for a seller to initiate home inspections (pest inspections too) prior to listing their place on the market. The rationale for that is to avoid any surprises in an escrow, via a buyers home inspection, that could place a seller at a negotiating disadvantage. It’s was also a great way to minimize or even eliminate contingencies in hot markets where there were multiple offers. Having inspections done up front by the seller is still a good idea in my mind, not only for the reasons mentioned above, but for the simple fact that often inspections bring up areas that a seller can easily correct with minimal expense prior to marketing their home. I found a little check list from a home inspection company that I thought could be helpful if you’re contemplating preparing your home for sale sometime in the near future. It’s worth mentioning as well that buyers might also find this useful if they choose to have their own inspections done once in escrow.

• Confirm water, electric and gas service are on, with gas lights burning
• Ensure pets won’t hinder the inspection. Ideally, they should be removed from premises or secured outside.  (I was at a house once where the inspector discovered a nest of skunks as he crawled under the place…we all departed REAL fast!)
• Replace burned out bulbs to avoid a “Light is inoperable” report that may suggest an electrical problem.
• Test smoke and carbon Monoxide detectors, and replace dead batteries
• Clean or replace dirty HVAC air filters.
• Remove stored items, debris and wood from foundation. These may be cited as “conductive conditions” for termites and other critters.
• Remove items blocking access to HVAC equipment, electric service panels, water heaters, attics and crawl spaces
• Unlock areas the inspector must access – attic doors or hatches, electric service panels, closets, fence gates and crawl spaces
• Trim tree limbs to 10′ from the roof and shrubs from the house to allow access
• Attend to broken or missing items like doorknobs, locks and latches, windowpanes, screens and locks, gutters, downspouts and chimney caps.

These are incredibly useful tips…I can’t tell you how many times I’ve needed to return to a property with the inspector later because of an inability to complete an inspection as the result of one of these elements being overlooked. You’ll really save yourselves some time…and potential heartache if you do these things up front.

Last night Lesley and I watched the movie “Date Night” with Steve Carell and Tina Fey. It was OK…not the funniest comedy I ever saw but for the most part enjoyable. Anyway, Tina Fey plays a Realtor and in one scene early on she’s showing a palatial mansion to some buyers and as they’re walking out of the place she tells them the house was originally listed for $1,850,000 but it’s been reduced since the market is slower and it’s now available for $320,000. She asks her clients if they want to write an offer. They respond by saying; “No, we think the market is going to go even lower”.

OMG…did that sound familiar! The question is, when is a deal really a deal? Or maybe another more relevant question could be…when do these rationalizations actually amount to inertia? My good friend and blog reader Michelle Kwok sent me a message the other day on facebook. Seems that she was chatting with a friend who told her she was looking to buy a house. She said: 

 ”I am not in a hurry. I want a good deal, like paying about 60-70% of the value of the house.” I asked her, “Value now, value in 2006?” Turns out, she wants to buy a house and pay 70% of the current value, in Redwood Shores, Palo Alto, Menlo Park.  And then she said, that she is patient, and is willing to wait for short sale/foreclosure.”

It’s funny because I had a guy I worked with, temporarily, about 5 years ago who told me roughly the same goal. Not sure what happened to him. It’s just, knowing what I do about the market around here, it’s hard to take seriously a buyer who states that they want to make an offer of $650,000 on a million dollar listing.  Call me zany…but me-thinks it’s a waste of time. Oh, and that story in “Date Night”? That reduction would amount to over 80%. Folks…that was a joke. It’s a movie…they were joking. You see, it’s a comedy and they joke like that.

It’s not that I’m saying the market doesn’t decline…of course it does. It’s just simply that courageous buyers who take a shot are the ones that make the market decline. One small detail…they’re not getting 40% discounts either. The buyer’s that wait, strategically, and re-enter the market place at exactly the right time (the literal bottom) and scoop all other competitors…simply don’t exist. Unless, of course, they’re characters in a romantic comedy.

I think it’s the buyers that write offers when they have no competition, under asking that get the best deals. It happened after 9/11/2001, it happened in the 4th quarter of 2008 and in most of 2009. Those folks bought when others didn’t. It’s that simple.

It sure seems that a whole lot of you (me too) define this building almost exclusively by Baja Fresh. Everybody seems to know that one, huh? Great job to all of you for answering correctly on Friday and congratulations to first time winner Tony Tong who arrived first and wins the $30.00 gift certifcate to Lotus Garden. Also answering correctly was Debbie Yeung, Nicole, Shrikant, Deepa, Pak, Bill, Jim S, Artie, Archana, Monica Martines, Marianne, Michael, Nancy Haddad, Alex O, Nancy, Suresh, the great and powerful Mr. Toler, Chris Hsiung, Nancy Chang, Larry Shaine, Jeff Liu, Kavita and AR. Thanks also to Valerie Clear who answered on facebook. Great job guys! Thanks for playing…see you again this Friday!

Sort of like it is here!

I have no doubt that lots of you are familiar with this particular hallway, this week you’ll need to tell me the name of any one of the tenants (businesses…etc) that occupy these spaces. Not just the name of the buiding. If you’re first you’ll win a $30.00 gift certificate to Lotus Garden at Charter Square. Anyway, all the rules of the road are available to view on the left hand margin as well as on the bar above. The winner along with all other correct answers will not be published until Monday morning. Any and all silly jokes, snappy quips and all wrong answers will be published immediately if not sooner. Have a great weekend!

In the almost 20 years since I’ve been a realtor, there’s one phenomenon that I seem to see happen over and over again. It goes something like this…The  Jones’s decide they want a bigger, nicer, better, smaller…whatever home. They then start looking, both online as well as at weekend Open Houses. It’s at that point that something strange happens…they kind of like a place! What follows typically is the inevitable phone call to either me, or to a lender I know who then refers them to me.

For some reason there’s this funny sort of common thread among these buyers who feel that they would like to make an offer on a new place before selling their existing place, usually via an offer contingent upon the sale of said place.  Why not? It’s logical and it sure seems less painful than the perceived alternatives…but what are those alternatives? Here’s a few:

1) The seller has plenty of cash on hand and doesn’t have to worry about selling their original place. There are certainly people like that out there…there just aren’t many of them.

2) The seller has a ton of equity in their original home which they can pull out and use for the new down payment and then sell the house later if they want to. This is occasionally possible but for folks moving up it’s difficult…particularly in this current lending environment. 70% loan to value is the rule now and often it’s hard to pay two mortgages as well.

3) You sell your house first. This idea seems to feel a tad intimidating to people because there’s always a fear that if and when they get an offer on their home they won’t be able to find what they want before it closes…and they’ll be rendered homeless.

Thus…the contingency offer. What this means is the buyer asks the seller to accept an offer that allows them to sell their original house before consummating the deal and closing escrow. The buyers feel safe because they feel like they’ve gotten the home they want. Herein lies the trap. The simple truth is that sellers don’t like contingencies…even the sellers who’re making the contingency offers don’t want a contingency offer on their place! There are just too many questions about the saleability of the buyers property! A seller who is willing to consider a contingency offer is certainly going to be far less flexible on price and terms than they would be with a non contingent offer. A buyer making this type of offer loses an awful lot of leverage by making this choice.

In my experience, selling your place first is the best, and most stress free choice. You’re not going to feel like a gun is at your head to have to sell in order to get the “dream house”. One of the biggest lessons most of us learned during the boom years was the fact that the “perfect house” comes up again…and again! In addition, once you receive the right offer you can always rent back after close of escrow, giving yourselves more time to shop for the new place. 90 days is not unheard of for an escrow and rentback combination and during that amount of time I’ve never seen a buyer be unable to find the right new place. Avoid the trap…be patient and sell first.

Now, of course, I know this doesn’t apply to everybody reading this here. There’s plenty of you who I’m not talking about…that’s for sure. It’s just that I know that there are some of you who can probably identify with this and for you.. think of this as a gentle call out, a challenge of sorts. You see, I stand at lots of open houses and I talk to lots of buyers. Often I engage in a dialog with you, and in the midst of that dialog I ask a few questions. Sort of like this:

Me: So, how long have you been looking?

You (Buyer): Oh, about 6 months I guess.

Me: Have you written any offers during that time?

You (Buyer): We wrote one a couple of months ago when there was multiple offers and didn’t get it. Right now we’re thinking we’re going to wait for another 6 months or so because we think the market is going to go down some more.

Me: Oh, so you think you’ll re enter it after that’s happened?

You (Buyer): Oh, sure. We think it’ll be a better time then. Prices will be lower. All this negative news right now isn’t good…we’re going to wait.

At the end of the day, and this comes after 20 years of doing this,  here’s what I sincerely believe. The majority of buyers don’t really want or care if they get a good deal when buying a house around here. Oh, they’ll certainly say they do…but it’s all really just smoke. What buyers really want is the security of other buyers that will give them the courage to buy a home in this really expensive area. Most buyers would much rather write an offer $100,000 over the asking price when there’s competition than write one $50,000 under asking when there’s none.

I hope you don’t think I’m joking about this, because this is my sincere observation over all these years in real estate. When it’s soft like it is right now, buyers sit on the fence. They rationalize that they’re prudently waiting for the right time when they’ll re-engage with the market and get a good deal. The truth is that nobody has a crystal ball that will allow them to know when the “bottom” has occurred. These buyers will come back when the market has reignited. I promise.

The buyers who actually do write offers in markets like this one are the one’s that actually do bring values down. They accomplish that because they have leverage. They simply buy when others are fearful…to paraphrase Warren Buffett. Here’s what I know, I have two active listings in Foster City right now. I had probably 100 people through one open house last Sunday and at least 50 through the other. That one has been on about a month and overall we’ve had easily 250 people go through it. That is not a sign of a dead marketplace. It’s actually about the same numbers we had in the first quarter of 2010 when everything was getting multiple offers…folks are just more fearful of pulling the trigger right now. These buyers are not going to disappear…they’re all going to eventually engage. Probably all at the same time!

I don’t know…call me weird, but I think it’s a good thing to buy when you don’t have competition. You may even save money.

OK, it was too easy. Still…it surely does show how much we all seem to use the Post Office Branch on Shell. Congratulations to Nancy Chang who answered correctly first and wins the $30.00 gift card to Chipotle. Also arriving correctly were Debbie (just seconds behind Nancy) Nicole, Kavita, Jeff, Kirk, Agnes, Jennifer Lo, Tony Tong, Nancy Haddad, Linda Atkins, Shrikant, Jim S, Edna, Suresh, Nancy, Hiro, Deepa, Anita Reiman, Bill, Roze Grant, Jodi, Jerome, Divine Dinulos, Larry Shaine, Asif, Jorge, and Paul Patron. Cudos also to Roger Haddad who answered on facebook. Good job you guys! See you all again on Friday.

Ford Unveils New Car For Cash-Strapped Buyers: The 1993 Taurus

It’s a rear end, a back door. The question is…who’s rear end and back door is it? If you’re first to tell me you’ll win a $30.00 gift card to Chipotle at Marlin Cove. Did you see Food Inc. ? I’ve been eating at Chipotle alot more since I did! Anyway, all the rules of the road are available to view on the left hand margin as well as on the bar above. The winner along with all other correct answers will not be published until Monday morning. Any and all silly jokes, snappy quips and all wrong answers will be published immediately if not sooner. Have a great weekend!