For Sellers, it would be great to receive an all cash offer, with no contingencies. With times as they are however, and with higher than average prices in Marin, all cash offers are not common unless a Seller has a really low-end distressed property with a low sale price. In many cases, Buyers may need to sell their home first in order to buy a new home, so it begs the question: Should Sellers accept a Contingent-Sale offer from prospective Buyers?

Until a transaction is closed, there is always risk involved. Buyers have been known to make the mistake of making another big purchase, like of a new car, just before closing on a home, which could put their loan-to-value capability at risk, and the loan could fall through. Even an all cash offer coming from overseas has a chance of never showing up.

An offer made contingent on the sale of another property is also risky as the Buyers may never sell their home; if the Sellers have taken their home off the market, the result is a waste of valuable time in possibly selling to someone else. For this reason, not many Sellers will risk it.

That said, Sellers shouldn’t ignore an offer contingent on the sale of the Buyers’ house without first exploring the possibilities, as some sales are not as risky as others. (Plus, Sellers might have the opportunity to get a higher price for their home, especially in this economy, as the Buyers will really need to give something close to the asking price, which isn’t always the case these days.) The first thing Sellers need to do is check to see if there is a valid listing agreement on the Buyers’ current property, then Sellers should call the Buyers’ listing agent to see if they can really get a sale in 30 days.

Other factors to consider are the condition and location of the Buyers’ property. Is it in pristine condition and in a great neighborhood that others find desirable? If it’s likely to sell quickly, Sellers may want to go with the contingent offer, especially if their home has been on the market for a while and they are heading into the dead of the Holiday season and winter, when property sales really slow down dramatically.

In addition, Sellers should ask their agent to talk to the Buyers’ listing agent to see if there are any foreseen problems with the Buyers’ property when releasing the contingencies to close the sale. The contract with the contingent Buyers should include a clause that requires them to notify the Sellers in writing if their deal is cancelled for any reason, and should also include an option for the Sellers to cancel the contract if they get another offer. If the Buyers have a back up offer, the Sellers may want to continue the sale.

Sellers may also want to put a provision for approving the list price of the Buyers’ house. Furthermore, Sellers may want to accept a contingent sale offer that includes a protection clause permitting the Sellers to continue to market their home for a back up offer. A release clause or kick-out clause should also be in the contract. The release clause allows the Sellers to notify the Buyers that they have a certain time period, such as 72 hours, to perform and remove their contingent-sale stipulation or withdraw.

If you would like to know more about how to proceed with or consider a contingent-sale offer, let me know, and I’ll be happy to answer any of your questions. Contact me: 415-755-8919;

Posted by:  Rick Smith

Selling a home today is very competitive, so making a good impression on prospective buyers is critical. There are a few home improvement projects that you can do that can make a huge impact and could give you a big return on your investment when you decide to sell.

1. Painting
   This one is sort of obvious, but it is the first thing you should do to increase your home’s appeal. Go for white or neutral colors that will lighten your rooms. Now is not the time to experiment with colors like fuchsia and lime green as you could turn off quite a bit of your audience of buyers. Buyers have an easier time imagining how they would infuse their own personalities on a “blank canvas.”
   
   Painting lightens and brightens rooms and instantly removes scuffs and dings that may have happened during your ownership. Adding fresh exterior paint is also an option, but if you are on a limited budget you may just want to paint the trim, doors, and shutters to improve the appearance at a low cost.
   
    
2. Landscaping
   Curb appeal is important! Buyers will be more excited about looking inside your home if the outside looks clean, trimmed, and inviting. Make sure you mow the lawn, trim the hedges, pull the weeds, and plant a few colorful annuals to improve the look of the exterior. Make the landscaping look low key and low maintenance. Although you may want to turn your yard into an English garden, there are many people out there that don’t want to take on the cost and time of the maintenance. Think clean, simple, and elegant to get the biggest boost in value.
   
    
3. Cleaning and de-cluttering
   As much as you love your family photos, start preparing your home by removing all personal photos from walls, dressers and counters, and remove all the “stuff” that ends up cluttering tabletops. Buyers want to envision their lives in your home, not yours. Personal items and the clutter they create have shown time and time again to block buyers’ ability to create this vision.
   
   Also, take a look at how much furniture you have in each room. Buyers are evaluating the size and space of each room in the house. Remove furniture that takes up too much space and fills up rooms. Make sure clothes, boxes, and mail are properly stored out of sight. Clean the home, and keep cleaning while your home is on the market. Kitchens, bathrooms, and bedrooms should look “unlived in.” Don’t forget to clean windows, doors, and floors, and to polish the appliances.
   
    
4. Plumbing repairs
   Make sure you have fixed any leaky faucets and toilets throughout the home. Water leaks under a cabinet could provoke and disgust a prospective buyer, and if the space under your sink looks like a cluttered mess, be sure to store or toss all the half-empty bottles and containers to free up some space.
   
    
5. Staging
   Staging your home can make a dramatic difference in the price your home sells at. Removing your personal belongings and replacing them with more artwork and decor, and adding newer looking furniture can make a difference. When the staging work is well done, it can convert your home from “just another listing” to a home that buyers can envision themselves in; a place where they can start the new life of their dreams. Professional stagers have special skills and materials they use, and know that items like lamps, pillows, artwork, and even furniture can tell a visual story.

These are the top five things I would do when getting a home ready to put on the market. Talk to your agent as there may be additional things of value that could contribute to getting a better price. If you need more information or ideas about getting your home ready to sell, don’t hesitate to call me at 415-755-8919 or email me at for a free evaluation.

Posted by:  Rick Smith

Interest rates have fallen to record lows, and a lot of homeowners are taking advantage of the terrific savings, especially since some of the homes may be underwater, to at least reduce their house payments.

However, homeowners who anticipate that they will want to sell in the next couple of years need to understand what they may net if they re-finance right now. Some owners view re-financing as a way to save money on their current mortgage. Borrowers who do this often ignore the impact of the re-finance on the size of the loan balance that they will have to pay when they sell.

For example: Say the current balance on a 4.125% mortgage is $300,000, with a payment of $1,685 and 23 years remaining. The borrower expecting to sell in two years refinances into a new interest only adjustable rate loan at the same rate, reducing his house payment to $1,031 per month, $654 per month reduction. Sounds pretty good, right?

The closing costs are $6,000, but the borrower has reduced his payment $654, which over two years sums to $15,696. By logic, the owner thinks he is ahead by $9,986, which is the difference between the two sums.

What he has overlooked, however, is that if he would have stayed with his original loan, he had paid down the balance by $16,307, which would have resulted in the additional net proceeds going into his pocket at the time of sale. What he thought was a gain of $9,986, is actually a loss of $6,321. Of course, if the new loan has a significantly lower interest rate than the original loan, the refinance could result in a larger net proceeds at the time of sale.

Interest rates are definitely on the very low side right now, and if the rates are significantly lower than your original loan, it may be well worthwhile to lock in a new low rate. If you are planning on moving anytime soon, however, I would definitely make sure to talk to your accountant about it first, just to make sure you are getting the greatest savings possible, and you will be netting as much money as possible, at the time of sale.

If you would like to know more give a call at 415-755-8919 or email me at rsmith@fhallen.com

Posted by:  Rick Smith

There was an interesting article on August 17 in the Housing Wire news publication that talks to the fact that mortgage applications increased at a rate of 4.1% for the week ending August 12.

I’ll give you a quick synopsis of what was said, and you can find the complete article here.

The article states that, as a result of the recent stock market plunge, interest rates fell to the lowest level since the 1950s as people pulled money out of equities and put them into bonds. Based on what happened last week, I too decided to refinance my home this week at a ridiculously low rate of 3.78%.

The significant drop allowed me to refinance my 30-year loan and convert it into a 15-year loan where I am basically paying about the same monthly amount, but now it will be paid off 10 years earlier. My total savings over the life of the loan will be a whopping $240,000!!!

These lower rates will also allow first-time buyers to qualify for a larger loan amount and buy a better house than what they may have been able to do just 30 days ago.

Home refinancing comprised of almost 79% of the loan applications last week; the average contract interest rate across the country fell to an average rate of 4.32% for a 30-year loan.

I would also suspect, that as a result of the stock market declines last week, home prices could dip, as an incentive for Buyers to buy now, rather than the seller risking a longer time on the market to sell their home.

July home sales dipped 3.4% in Marin. I have to add that July 2010 was one of the worst months we have in real estate, so the number of sales were already at a low basis to begin with. As sellers see lower activity in the market, they’re faced with having to reduce their prices to move homes that have been sitting on the market since spring.

If a buyer were thinking about selling versus renting, now would be a great time to buy. Rent prices in Marin have increased 6% over last year and the vacancy rates are at extremely low rate of about 2%. Rents will only continue to go up with these low vacancy rates, as it becomes a landlord’s market in getting higher lease rates.

Posted by:  Rick Smith

Everyone agrees that to sell a home, you need a reputable real estate agent who will: advise you on how to prepare the house for market, hire a professional to take the photographs, and show the home as often as possible. Here are five more things that will help you get your home sold – that may not have occurred to you as a prospective seller.

1. Neighbors & curb appeal- Most homeowners know that they need to make their home as appealing as possible both inside and out. What they also need to understand is the importance of how the neighboring properties look. It’s in your best interest – and theirs – to inform the surrounding neighbors that you are trying to sell so that they might also put their best foot forward in attracting the right buyers. Furthermore, neighbors can help you sell your home because they may have friends or family looking to move into the neighborhood. For these reasons and more, it’s important that the realtor send “Just Listed” postcards to neighboring homes.
2. Sights, smells, and sounds – It’s no surprise that smelly foods or animal odors, or the sound of sirens from a fire station next door, can make selling a home a real challenge. What many don’t realize is that pleasant scents and sounds can truly help seal the sale of a home. A yard with jasmine or lavender can be attractive to even the allergy victims out there, but do refrain from artificial air fresheners as they can be a turn off. Of course, the wonderful aroma of baking bread always seems to do the trick for many homes. Although you may be desensitized to the views your home offers, always pull back the curtains and turn on every light in the house to make your home lighter and brighter. If you are thinking of doing some painting inside, refrain from using dark colors: the lighter and brighter the better as they make rooms appear larger and more appealing.
3. Your dog-  If you have a well-behaved dog, believe it or not, sometimes they can help in making the home feel more inviting to a family, just make sure it is clean and doesn’t smell. Ask your agent if you are not sure. Sometimes even showing pets in the listing photos can be an appealing idea to get the welcome message across.
4. Your happiness- Video and even letters that talk about all the virtues you love about your home, environment and neighbors are terrific to show prospective buyers. Wide open curtains that stream light and accentuate home features create the thought that people that live here seem very happy to live here. Of course, keeping the home in terrific condition, with the gardens well cared for and children’s rooms decorated in a customized fashion always helps, but make sure you don’t over do it. Having 20 posters of Justin Beiber carrying a theme for a child’s room may turn off many prospective buyers. Staging your home for a life well lived is the way to go. It’s not just about paint and carpet.
5. The freeway you think is too close- There is such a thing as having a train or freeway too close as to rattle the walls, but attitudes are changing as gas prices continue to rise. Being close to freeways and bus lines is starting to make a little more sense in cutting commute time. I’ve never heard so much talk about the environment and buyers looking to own homes that allow them to get rid of their cars entirely as I have in recent years. What might have been too close to the freeway before, may now have a new spin as a convenient commute to San Francisco!

These are only a few things to help benefit you as the Seller. If you would like more ways, don’t hesitate to call me at 415-755-8919 or visit my website.

Posted by:  Rick Smith

I get a lot of questions regarding the use of an owner’s home insurance for repairs. I ran across one recent home buyer who had purchased a home that was 10 years old; as the rainy Marin winter has now subsided, it appears that exterior paint is flaking off the house and they have noticed that the deck that was painted, is now rotting and lifting. If the home was staged or prepared for sale, chances are that the owner may have elected to use lower grade materials or didn’t prepare the surfaces properly at the time the paint was applied. That doesn’t mean they were trying to cover up defects, although I’ve seen that too. This point goes back to whoever did the home inspections prior to buying the home. A great home inspector uses a screwdriver to poke around the outside of the house and decks to see if there has been any dry rot, and may be able to tell you if there are issues prior to lifting your contingencies. At this point, prior to releasing contingencies, your buying agent should be able to go back and ask for a credit for repairs at the close of escrow, allowing you to take the money and enlist your own contractor to do the repairs with higher quality materials.

To answer the question of utilizing your home insurance to receive repair money, chances are the insurance company will tell you this is a routine maintenance issue that is not covered. A word of caution though, if the insurance company does cover the cost, please understand this may go on your insurance record and your insurance costs may go up. Furthermore, depending on the amount of the claim, they could cancel your policy. The second thing that might happen, if you try to change to another insurance company, is that you may be a high risk and could have problems getting the insurance, and if you do, it will be at a higher cost. It takes three years for a claim to come off your record, after which you start at ground zero again, and you could switch companies.

An important thing to do as you buy a home is to try to set up a home maintenance fund where you are saving each month to do the necessary repairs and maintenance when needed. The upside is that you will not only have the costs covered, but you will also be choosing top quality materials and thus you may not have to do these same repairs for a very, very long time.

If you have any other questions, don’t hesitate to call me at 415-755-8919.

Posted by:  Rick Smith

The question of whether one should sell now or rent is a common one these days.  There really is no way to know whether selling later would ensure a higher sales price, especially in the near future. If you were planning to rent your home for 10 years and then sell, there’s a good chance it will go up in value, but will the value rise next year, or the year after? There is no telling.

At the recent Marin Association of Realtors (MAR) meeting that I attended this week, the forecast was not for home values to rise this year. There is apparently a string of foreclosures waiting in the wings as shadow inventory, and MAR was predicting the last of it will not be flushed out until 2013. As long as the distressed inventory is still hanging around, it is less likely home prices will go up, as the comps in the neighborhood will remain low.

There are strong indications that massive shifts in the mortgage market may happen, with the possible elimination of Fannie Mae and Freddie Mac. If this happens, it may narrow the availability of home ownership and then it will be even more difficult to sell your home.

There is belief that the first areas to recover will be the coastal cities, including the Bay Area, but timing the market accurately has been, and will still continue to be, manipulated by government forces.

The next real question you have to ask yourself is, do you want to be a landlord?

There are many factors to consider here. If you plan on living in another state or city, it will be more difficult as you have to be able to take care of tenant issues. What happens if a pipe breaks, the heating system goes out, or a window is broken? Dealing with these types of things becomes really difficult from a distance unless you pay a property management company. You also have to consider landscaping. What if the tenants don’t water or mow the grass and your lawn looks like a disaster area when you get ready to sell? Tenants don’t have pride of ownership, and they could damage the inside and outside of the home, including the carpeting. When you are ready to sell, you could face some huge costs of deferred maintenance in order to get your house ready again. The potential costs could be more than what your home value has increased over the time you rented, and yet you have had to deal with all the time and trouble of being a landlord.

I think the big incentive for a person to sell right now is the historical low interest rates that buyers are getting.  Why is that a big deal to sell? If home loans are more affordable, there is a larger pool of people that have the ability to buy a home in a higher priced area such as Marin. If the interest rates start creeping up, and fewer and fewer people can qualify for a loan, then not only will the values not rise, but there are fewer people to buy. It may take much longer to sell your home.

It’s actually a great time to buy or sell your home in Marin!

Posted by:  Rick Smith

There are always a lot of questions about remodeling and trying to increase the value of one’s home.

Most of the time, depending on the work you do, the average amount most people recoup is around 75% of the total cost of the remodel. You may ask why bother, but consider this: first, you will enjoy your home more, and second, when you do get ready to sell, if you haven’t remodeled and updated, you may have a difficult time finding a buyer as competing, remodeled homes may be more attractive and appealing. So in that case, remodeling or making improvements will definitely help sell your home.

I ran across an article recently from the San Francisco Chronicle about increasing the value of your home by installing solar panels.

You can read the full report here.

To summarize, the article talks about the sales of 2,000 homes sold between 2000 to 2009, and what value they recouped by installing solar panels. The data reveals that a typical home generally sells for an additional $17,000 above the cost of a comparable home. That’s in addition to saving on their electricity bills. If there are two comparable homes out there, Buyers are choosing the ones with solar panels, as they understand the long run benefits as fuel and electricity costs continue to climb. I think as people see fuel costs rise, they are more cognizant and recognize that fuel costs are never really going to go down in any significant way, and will most likely continue to climb.

Solar is a way of the future, and making this investment could really be worth a homeowner’s time and money, in both the short run by saving on electricity, and when it comes time to sell.

Posted by:  Rick Smith

There was another positive article in the Marin IJ newspaper last Friday, which really gave home owners a boost in how the Marin housing market is doing. This article can be found here if you would like to view it.

To summarize, there was an 11% increase in home sales in the month of March over last year. And even better news was that the median price of a home in Marin rose 2.4% to $779,000, according to the County Tax Assessor.

This was the first time in six months that both the sales volume and prices have increased at the same time. In the past we have seen the sales volume increase over the previous year, however, the sale prices were at a reduced level because of all the distressed property sales, which in reality, have also driven down the overall home prices.

The median sales price of $779,000 was up +28.2% over the previous month, which shows the number of distressed sales are slowing down and there is an improvement of non-distressed home sales. I know from my open house last weekend that the number of people visiting open homes is way up from what it was prior to March. Sales across the country are improving as well, and there is a lot of pent-up energy out there to buy homes that are driving the increases in sales.

One of the key factors that we have not seen in the last couple of years is the activity in the high-end of the market. 28% of the homes priced from $3 to $5 million were in contract last month, up from only 5% from the previous month. People with money are deciding that now is a good time to buy. Meanwhile, the more affordable range of under $500,000 has 49% of the homes in contract, and the price range of between $500,000 and one million now has 41% in contract. A balanced market is when about 30% are in contract at any given time, and 40-50% signals a seller’s market.

All in all, it’s a great time to buy. We are also starting to see interest rates increase, which will mean the affordability of house payments could force people to rethink what they can afford.

If you are thinking about buying, my advice is to go for it now before interest rates go up any higher!

What is your sentiment about the current spring market?

Posted by:  Rick Smith

When you are compemplating work to be done on your home, remember that many times you must have a permit. Basically a permit is the community’s legal permission to proceed with work done on a project, and your agreement to do the work in compliance with current codes.

Even if you plan on doing the work yourself, you have to have a permit. To get an exact answer as to whether you need a permit, you should first check with the building department. In general, you will need a permit if you expand or stucturally alter your home or any of its wiring, plumbing or mechanical systems.

Not all work requires a permit, such as many redecorating and repair jobs. This includes replacing cabinets, replacing floor coverings, painting and decorating, replacing roofs, replacing windows (if you are not altering the size of the openings), replacing plumbing fixtures (if you are not altering the plumbing), and replacing light fixtures and appliances (if you are not altering or replacing the wiring).

When your work does call for a permit, they are issued through the building department (may also be called “Community Development”) of your town, which you can find online. In Marin, the County website has some good basic information on their Building and Safety page. Generally the cost of the permit is based on the size of the project, the number of inspections required, and a variety of other factors. You should also call or visit the town building department ahead of time to see what you will need for the permit. For example, if it’s a wood stove, you might be required to get the name and model number of the stove.

If you decided to go ahead and do the work without a permit, and get caught, the first thing that will happen is that the building department will request you to stop work until you have obtained the necessary permits. Once you have the permits, the inspector will inspect the current work and if it has been done correctly, the inspector will allow the work to proceed. If there are errors, they will ask that those errors be corrected and then reinspected before proceeding with the work.

Another good reason to obtain permits is that it is your legal responsibility to disclose work that’s been done when selling your home. If you didn’t obtain the proper permits, you could at a minumum lose the sale of your home, and also you could have very costly liability issues. If your home is damaged, and you didn’t obtain the permits, the insurance company may deny coverage for the loss.

The best rule of thumb when is doubt is to simply call the building department and ask!

Posted by:  Rick Smith

Recently a Seller received two offers on their home in less than two weeks. The Seller accepted the offer from the Buyer who seemed the most committed to buying the house.

In less than three days, the Buyers backed out. Why?

The Buyers did their Home and Pest inspections, and found considerable termite issues with the decks and underneath the bathroom floors, and it was also revealed that the roof was nearing its life expectancy, so the Buyers decided it was too much to take on in buying the home.

If you have ever seen a Home or Pest inspection, they generally are a 45-60 page report that details every reason why you wouldn’t want to buy a home in California. These reports reveal just about everything wrong with a home, and give recommendations for work to get the house up to the 2011 standards, even if a home was built many years ago. They leave a lot of room for worry, and unless the Buyers really talk through the inspection with the inspectors, the reports can be frightening.

It’s my advice that a Seller should have both the inspections done before going on the market, with a minimum of at least a pest inspection for two reasons. First, if there are major problems, it gives the Seller the option to fix the issues prior to putting the home on the market, or to simply not do the repairs. Second, and more importantly, these inspections become Seller disclosures to potential Buyers, so before the Buyers make an offer, they are fully aware of all the uncovered issues. A lot of Sellers resist having the pre-sale inspections done because they don’t want Buyers to know too much until the Buyers fall in love with the home. Big mistake.

The reason being, is if the Buyers are fully aware of the issues, they knowingly are making an offer based on the knowledge of any issues that were identified. More importantly, now that the owner has disclosed what’s wrong with the home, the Buyer doesn’t have a lot of room for negotiation as they entered the contract knowing the issues. Unless the Buyers’ inspections reveal other damage not noted in the reports, they really can’t ask for additional money for repairs or price reductions, because the issues were revealed at the time they entered the contract. The Buyers made the offer “As Is.”

Take my advice, and unless your home is going into foreclosure or will be a “short sale” and you can’t afford the inspections, you should always try and do them. A Seller will get more qualified Buyers and have a much greater likelihood of the Buyers not asking for huge concessions off the price of the home when they are ready to close.

If you would like to know more, give me a call at 415-755-8919.

Posted by:  Rick Smith

Although the stock market seems to be in a Bull Market once again, many investors are still afraid to put their money back into equities for fear of what happened 2 1/2 years ago when everything crashed and people lost 30-40% of their wealth. This poses the question, “Should I pay off my home instead of investing in the market?”

A recent article at CNNMoney.com sheds light on what a person should do with any cash today. You can find the full article here.

The idea of cutting down your debt is a good sound strategy, but is a home loan the right place to cut? The biggest thing to think about is that the mortgage interest you are paying is tax deductible and if history continues to repeat itself, then it may be wiser to put money into the stock market.

Likewise, if you plan to trade up or downsize, it doesn’t make sense to put extra money into your mortgage: you don’t want to put more money in your home and not be able to sell it, if the market continues to be shaky.

What should be paid off is any credit card debt you may have, and if you aren’t maxing out your contributions to 401K and IRA accounts, you should definitely be putting money there as well. If you have already done that, and you are near retirement, then it would make sense before paying off your home to make sure you have enough cash left for unexpected medical or financial emergencies. You should definitely not pull money out of your IRA to pay off your home loan, since the IRA will be taxed at ordinary income tax rates.

If you are in the 28% tax bracket and you have a 5% home loan, the effective rate of return in paying off a home mortgage loan is 3.6%. By comparison, a 50/50 mix of stocks and bonds has historically returned an average of 8.2% in the long term, although today it might be wiser to anticipate around a 6% return.

Just some food for thought. You need to decide what’s best for any additional cash you may be saving.

If you have any questions, don’t hesitate to call me at 415-755-8919

Posted by:  Rick Smith

Many times I am often asked, “Will Green features pay off when you are selling your home?”

With all things being equal, the answer is: “If buyers have a choice between a house with low water and energy costs and one where the costs are high, they will probably choose the home with lower operating expenses.”

Most of my buyers today are pretty savvy about a lot of the features of energy efficiency and noise reduction, and most of my buyers generally take into consideration the cost of installing double pane windows versus buying a home that already has them. Installation for double pane windows can be expensive, so the ones that already have them definitely have an attractive selling feature. Let’s face it: homes in the Bay Area are expensive compared to homes in other parts of the country. So, if the buyers know there may have to be an additional outlay of money down the line, they will try to avoid it. On average replacing windows returned more than 75% of the total cost over the long run. Combine that with possible incentives, lower energy costs, and the appeal for when you sell, and it’s almost a no brainer.

Consider:

• A tight house prevents heat loss. Utility companies are are now offering rebates for installing weather stripping around windows, doors, vents, cables, and electrical outlets.
• Using a programmable thermostat and setting it to reduce output when no one is there or when you are sleeping will save another $100 or more per year.
• When you buy a new furnace or new appliances, buy ENERGY STAR appliances that meet high-level energy efficiency. Depending on what you buy, the government will rebate up to 30% of the cost of the furnace or appliance this year, as long as you purchase by December 31, 2010, as part of the Federal Tax Credits for Consumer Energy Efficiency.
• Another inexpensive way to save money is by changing light bulbs to fluorescent from incandescent. And, as I heard from Consumer Reports the other day, the trend towards LCD lighting, which will give you a brighter, more natural light at a lower cost, is on the way.

So as you think about selling or buying your new home, you should think about these new incentives. It’s apparent that energy costs aren’t going down anytime soon, and with the tragic accident that just happened in San Bruno, someone will have to pay for the expense of rebuilding and examining all the gas lines for any additional problems. Something tells me it won’t be just PG&E: they are bound to pass the costs on to the consumer in the form of higher energy costs.

As the Nike commercial says, “Just Do It.” In the long run you will be glad you did for both the sake of your home and the reduction of greenhouse gases in the future.

Posted by:  Rick Smith

One of the questions that come to mind for a home buyer or seller is “How do I prevent problems in closing my escrow?”

The key to making sure your escrow closing goes smoothly is choosing a great Realtor that will anticipate problems before they happen. In order to stay on track, a great real estate agent uses a checklist of tasks that must be completed before the close of escrow, and then follows up to make sure they are all completed prior to the sellers or buyers going to the Title Company to sign closing papers.

Most issues that delay or prevent closings fall into three categories: loans and appraisals, titles, and home inspections.

1) Loans: Financing falls through at the last minute - An agent needs to help buyers understand that a prequalification letter doesn’t necessarily mean they are preapproved. Because of tighter lending standards and heightened concern about mortgage fraud, there is a lot more paperwork required from the buyer today. Making sure that the buyer gets in all of their documentation as quickly as possible to the lender is key, because 9 times out of 10, there is always something else that a lender will need in order to issue closing documents to the Title Company.

2) The appraised value doesn’t come in to support the contract price – FHA loans require comps to be within a three-month time limit, which means it can be hard to find comps in some neighborhoods. The agent should always work with the appraiser if possible to submit comps or reports that show the property’s condition and the neighborhood that the banker has never seen.

3) Title can’t be transferred at closing – Title defects are another issue. Getting a preliminary title report as quickly as possible to surface those issues is extremely important for a buyer or seller, as you then have time to resolve them quickly. Short sales and REOs are particularly prone to issues, as sometimes the owner doesn’t surface them or the owner isn’t around. Perhaps there was work done on the property and if it went unpaid, the sellers might now have a lien on the property, or maybe there are unpaid HOA fees. Make sure the proceeds of the sale will cover any mortgage liens and unpaid fees.

4) A home inspection uncovers serious issues - For the seller, it pays to have their own inspections done and work performed prior to listing their home for sale, as many issues can be resolved before they become problems during the negotiation process with the buyers. However, sometimes sellers can’t afford this, but having a good agent to do a thorough walk-through with the owner helps. Asking the owner about the age of the roof, any repairs that have been made, and looking at the foundation is also helpful, and alerting buyers to possible high-ticket repairs and suggesting they factor those costs in will cut down on the amount of post contract negotiations.

Above all, allow more time for the transaction and closing to happen. A good buyer’s agent can get a realistic estimate of the clients’ closing date by creating a timeline of how long inspections and approvals will take to ensure making the closing day on time.

Posted by:  Rick Smith

I work with a lot of buyers and I always get asked, “What are all these crazy foreclosure terms and what do they mean?”

To help make sense of all these terms, you can divide them up into three categories.

1. Pre-foreclosure
Pre-foreclosure homes are the ones in the process of foreclosure, but have not been auctioned off. Owners often try to sell the properties because they owe more on their mortgage than what the home is currently worth. This is called a ”Short Sale” although the process is far longer to undertake than what the term implies, as it is usually complicated and a slow process that can take anywhere from 3 months to a year to complete. However buyers are given the chance to inspect the home prior to purchasing, whereas it’s not always the case when buying in other stages of foreclosure.

2. Foreclosure
The second category is the public auction at a foreclosure sale. Homes in this stage are well-priced, but also come with a few challenges to buy. These homes are not available for inspection and buyers may later discover the property needs lots of repairs to make it suitable for living. Many of these homes are bought by investors who have experience working with these types of homes, or the home may be taken back as an REO by the foreclosing lender or bank.

3. Real Estate Owned
The third category is an REO or “Real Estate Owned” property that’s been taken over by the bank. Although homes in this stage sometimes do not offer buyers the best price, buyers can generally perform thorough inspections, and many times the banks have made some repairs before putting the property up for sale. The bank then sells the homes “as is” and will not pay for any cosmetic issues, although they will often pay for some repairs that are health or safety issues. One of the key issues here is reserving enough money as a cushion to pay for unexpected repairs.

This process can be very confusing and I hope this simple explanation helps.

Homebuyers, have you been hesitant to consider purchasing one of these types of homes? What are your biggest questions/concerns? Leave me a comment below and I’ll be glad to answer any question you may have.

Posted by:  Rick Smith

If you are toying with the idea of jumping into the market, either as a buyer or seller, Open Houses can provide a wealth of information – most importantly, the type of information that you cannot get from the Internet. This Sunday, April 25, is Frank Howard Allen’s Open House Extravaganza and hundreds of our listings throughout the North Bay will be open to tour. Whether you’re a buyer or seller, looking for a potential agent or just curious about the market, here are some things you can learn this weekend:

For Buyers
If you are a “potential, somewhat skeptic, maybe yes, maybe no” buyer, you most likely want to assess the homes in your price range to find out if there’s anything that even appeals to you. (This is sometimes called the “I don’t want to waste your time” stage, and we recognize that it really is the “I don’t want to be bugged by a real estate agent” stage.) When at this stage, public Open Houses allow you the freedom to check out specific homes and neighborhoods, become familiar with comparable sales, and learn what your money can buy.

During this process, you will also learn about yourself and what you really want in a home. Most buyers don’t end up with everything on their wish list; the more homes you visit, the easier the task of deciding what you can and cannot live without. It’s very difficult to do this without hitting the road.

If you have not yet chosen an agent to work with, Open Houses are an ideal place to interview for one. It’s important to find someone who is a good match for you, whether the criteria is personality, expertise, presentation or a combination of all three. Visiting an Open House allows you to observe agents in action and find the right fit.

The buying process can have many false starts, so if you meet an agent that you are impressed with but find that you need to put the brakes on the process, keep in touch. He/she will be able to provide you with updates so when you do get back into the market you are not beginning at square one.

For Sellers
If you are considering selling your home, the first order of business is to check out the other homes for sale in your neighborhood. It’s vital to know what your competition is because when it’s time to set your asking price, your agent will include these homes in the “Comparative Market Analysis,” the report that is used to determine where the market places the value of your home. It’s to your advantage if you have actually seen the homes yourself.

Another reason why it benefits you as potential sellers to visit Opens is that you can quickly learn how homes should – and shouldn’t – be presented when they are placed for sale. First impressions are the most important and you will want to “showboat” your house for prospective buyers.

Looking for an Agent?
If you have not selected an agent to sell your home, visiting Open Houses can teach you a great deal about agents and the service they provide. Ask yourself these questions when you go:

1. Was the agent enthusiastic about the house or did it seem like he/she was just marking time till the open house was over?

2. How did the agent engage with the public? If you were a buyer, would you feel comfortable asking him/her questions about the property?

3. Try to gauge the agent’s market knowledge: is he/she experienced in selling properties in your neighborhood?

4. Was the agent effective in getting the house ready for public viewing? How about the agent’s attention to detail?

5. Are you impressed with the quality of the agent’s marketing materials?

6. Did the agent seem genuinely interested in you?

The final question to ask yourself would be: Based on this person’s performance, is this someone you would want to represent you and your interests?

Buyers and sellers, we’re glad to see you out and about at Open Houses and we hope to see you this Sunday.

Posted by:Noreen Smith

When homeowners are asked what the most important criteria are in selling their home, the reply is often, “To sell at the highest price in the shortest amount of time.” While it’s natural to think that way, the current economy requires a more strategic approach, one in which sellers concentrate first and foremost on their primary objective: the reason why they want to sell in the first place.
 
Once the decision is made to sell, the next steps are selecting a qualified agent and establishing an asking price. The second must not be done before the first. When choosing an agent, review his/her experience, services, and marketing plan. Do not choose someone solely on the fact that he/she agrees with your asking price. For help with this process, review the Ten Questions to Ask a REALTOR®.
 
Real estate agents don’t establish value, the market does. Under no circumstances should you pick an agent based on price. The best agents have the confidence to tell you the truth about the market. Ideally, you should select an agent based on the criteria mentioned above; then together you can determine the asking price of your home.
 
So how do you settle on that magic number? Before answering that question, think back to when you purchased the home. How did you determine what to pay for it at the time you bought it? Most likely you and your agent compared it to all the other properties that met your criteria and arrived at a value based on that comparison. Buyers still comparison shop, and have a greater advantage today because of the sheer amount of information available on the Internet. (One thing to keep in mind is that the Internet often only discloses the asking price. Your agent will research the sales price – a truer gauge of the market.)
 
In the same way that you compared properties when it was time to buy, you will need to make comparisons if you truly want to sell. Your agent will prepare a document called a “Comparative Market Analysis,” or CMA: a report that compares the location, size and amenities of your home with recent sales and other comparable homes currently for sale in or near your neighborhood. 

In evaluating this CMA, it’s important to point out:
 
“Actives” represent the upper end of your price range; “Solds” represent the reality of the market. “Solds” are the most important stats to use in your evaluation. Your asking price should be at the top range of the “Solds” and the bottom range of those “For Sale.”
 
Your agent may include in the CMA the “Expired listings,” or those homes that didn’t sell. They represent the “out-of-range” price point. If you price your home in this “out-of-range” category, your home will not sell either. To receive the most amount of money in the shortest amount of time (the stated goal), you must price at market value. Think of the CMA the way a doctor thinks of an X-Ray: it shows precisely what’s going on so an informed decision can be made.
 
Consider these terms when determining your asking price:
 
Cost – The amount you paid plus the cost of capital improvements.
 
Price – The amount being asked for the home.
 
Value – What a home is worth to one person in an isolated situation.
 
Market Value – The amount that would appeal to many people and cause a sale within a reasonable period of time.
 
If you accept the above definitions, you must agree that there is no relationship between cost and market value. This is one of the most difficult points for a homeowner to accept. Value is a function not of what you have in your home, but in what you can get out of it.
 
Some sellers find themselves in the unenviable position of having to sell before they’ve had a chance to build equity in the home; others realize their home’s value has dropped below what they paid for it.
 
In both situations, sellers are left with a tough choice of whether to sell at a loss or stay in the house. The question to ask is, “Do the benefits of moving exceed the amount of the loss?” 
 
If you must sell now, take your time and choose an agent in whom you have confidence; one who will put your best interests first; one you will respect enough to listen to – even if the news is not something you want to hear. Then collaborate to arrive at the best price.

Have you recently sold your home? How was the asking price established? Let us know about your experience.

Posted by:Noreen Smith

Once you’ve made the important decision to sell your home, it’s a smart idea to interview at least three potential REALTORS^® before deciding on whom to hire. Without any obligation, you can invite local agents to preview your home and prepare a listing presentation. (Referrals, word of mouth, sales presence in your neighborhood, local brokerage websites – are all ways to find a potential REALTOR^®.) When agents arrive for the presentation, they will likely have prepared a Comparative Market Analysis (CMA) with data on nearby similar homes that have recently sold. They will also provide you with information on their credentials, a marketing and sales plan for your home, benefits of any company affiliations, and why you should list with them. For your part, it is important to prepare a list of questions to ask in return. Following are some to keep in mind:

1. How long have you been in the business?
2. How many properties have you or your company sold in the neighborhood?
3. How will you market the home?
   • Who will photograph my home?
   • Will you create a complete address-specific website for my home?
   • How else will you market the home?
   • How do you feel about Sunday open houses? Who would hold the home open?
   • May I see a sample flyer?
4. Will you provide me an update on your marketing efforts, as well as an overview of any new comparable active, pending and sold properties?
5. Will I work with you or your assistant?
6. How will you keep me informed?
7. Will you provide references?
8. What are the top three things that separate you from your competition?
9. How much do you charge?
10. What haven’t I asked you that I need to know?

For more seller tips and articles, click here.

Posted by:Noreen Smith

My new listing in Peacock Gap, San Rafael sold in a weekend with motivated, urgent, intentional buyers competing for the home. Isolated incident? Not. The key is strategic pricing. Buyers are savvy and will recognize and act on value when they see it. For the past couple of months I’ve been hearing about and experiencing multiple offers all over Marin County. Savvy buyers recognize this is an A+ prime market, understand real estate cycles and know their property will be worth a lot more in a few years… imagine 10 years!

The game has changed but I still love playing it! Let’s play ball… we’ve got a pitcher, a catcher and you’re up! This is the time to hit a home run with a solid piece of Marin County real estate at a price that was previously thought to be untouchable. Call me at 415-925-3285. Lock up a deal now, I know where they are.

After 20 years and 500 escrows… there are no surprises.

Posted by:Patti Cohn

It’s spring, the height of the selling season, and agents are ‘very busy’. Yet they’re also hungry because for all their work and effort there have been very few closed escrows. (For example, the topic at another marketing group was how to price the $1M plus home in San Rafael since there are 96 for sale and thus far this year only three have closed escrow.)

One of the six by-invitation-only Realtor marketing groups I attend meets at Tamalpais Bank in Corte Madera. (Each group is 10 to 30 agents from different companies who gather to help each other succeed). By presenting property and analyzing sales these groups help us create successful sales. From the Tamalpais Bank meeting:

“Tell us about the closing Willow. I heard it was tough.”

“After 28 years in the business and 100s of escrows, the closing was tough but manageable. The first lender changed underwriting standards after two weeks. Because the communications were clear nobody panicked as the buyer switched lenders. The second lender presented their own challenges including a last minute demand that included two review appraisals.

“Congratulations on your Ross listing, rumor has it that it’s a beauty. But it won’t be on for another week, right?”

“Yes, but I can get you in to see it. Hey, another rumor, two more sales and you’ll move to #1. So when’s your next sushi feed?” (A reference to my famous brokers’ open houses where I serve sushi).

“Soon.”

“You’re so involved and full of energy. How do you stay up and energized all the time?”

“I make like an energizer bunny with an on/off switch … right now the level of energy that it takes to get things done is quite high … but I’m not sizzling all the time. Wednesday evening, in the midst of the closing of Willow, I was so embarrassingly flat on a referral that was completely in my niche – a couple wanting to sell a beautifully crafted, water view home blocks from my office in order to purchase a smaller home in west Marin.”

“I may have somebody for that property. How many bedrooms and what’s the price?”

“There’s no price set. They asked for a price and since it was a pre-planning meeting I used the network formula – I took the price that ‘seems right’ based on experience, then knocked off 15% for market conditions.”

“What is the most important factor in today’s market?”

“Buyers are in no great rush unless they perceive a bargain so the missing factor is energy. It is imperative that the agent and the sellers ‘energize’ the property.”

Posted By: Tom Verkozen

After a phone call on Tuesday, ”I’m excited. I’m going to buy the home of my dreams through the listing agent and because she’s motivated and I get a good deal and save money,” I did some research. First, let me be clear – I get what she was saying about saving money and it seems there should be some savings for the buyer. ‘Seems’ is the operative word.

We know the listing agent is motivated. The listing agent is always motivated. Listing agents want to sell property. I know I always want to sell my listings.

The $84,000 question is, Do buyers get a better deal by going directly to the listing agent? I believe they do not because the listing agent is inclined to support and stand by the price they helped place on the home.

Here’s some common real estate dialogue:

“We just reduced our price and now it’s a drop dead good deal!”

• But that reduction was 3 weeks ago and it still hasn’t sold.

“Yes but now it’s priced right!”

• This is your second reduction. What is the right price?

“We have 5 very interested parties circling.”

• Circling, but no offers?

“Do you have a buyer?”

• Yes. (Now we have a really motivated agent – and one who’ll listen to market statistics and comparable sales in order to justify a ‘willing buyer/willing seller’ market price with the motivated seller).

Lastly, I reviewed the last six months of sales in my home town, Ross, comparing the list price with the sales price. On the average the buyers who shared their representation with the seller paid 8.49% MORE than buyers who had their own agent representing them. That’s $84,900 saved? Not exactly. A higher price is not saving – you’re the seller.

Posted By: Tom Verkozen