Archive for the 'Buyers' Category
I am embarrassed about my infrequent posts as of late. I have been on the run, working with buyers and sellers of Sonoma County real estate. Out of town buyers are out in force, looking for that special retreat property, horse property or wine country second home, from Sebastopol to Healdsburg, Santa Rosa to Guerneville. In the last year I have worked with buyers from San Francisco, Berkeley, Marin County, Provence, St. Louis, New York, Las Vegas, Seoul, Los Angeles, Burlingame, Palo Alto and San Jose, all in one stage or other of the Sonoma County home buying or home owning process.
Meanwhile, gardens are in peak bloom, the grapevines have leafed out. My neighbor’s pinot has set fruit I noticed today. The ROSES are in full force. Everywhere you go, from country lanes to in town, there is a riot of roses.
I’ll leave you with a few pictures until my next post.
Otilia and I have seen several articles that are claiming double tax credits for buyers who go into contract by April 30, 2010. Kathleen Pender in the San Francisco Chronicle last week detailed how some home buyer’s were tweaking their purchase timeline to take advantage of both the federal tax credit and the recently revised state home buyers’ tax credits mentioned here a couple of days ago.
The federal government currently is offering a credit of up to $8,000.00 if a buyer has an accepted purchase contract by April 30th and closes escrow by the end of June. The state of California is offering a $10,000 credit given over 3 years (BIG NOTE: This credit only can be taken against your state tax liability–if you don’t have $3,300 dollars worth each year, you don’t get the full credit.)
The big question is can buyers get the state and the federal credit? The state credit becomes available May 1st while you must be in escrow no later than April 30 to take advantage of the expiring federal credit. Some people seem to think that by closing escrow on a purchase after May 1st, but initiated before close of business April 30th, you can double dip on these tax credits.
However, when each of us read the bill it seems that the authors did not intend buyers to get both credits. ftb.ca.gov/forms/2009/09_3528.pdf This has caused a fair amount of confusion for potential buyers. From yesterday, when we started working on this post, to today, the California State Franchise Tax Board has provided further clarification on their home page.
Tax Credits for New Home Purchase / First-Time Buyer
The New Home / First-Time Buyer Credits are available only for purchases that close escrow on or after May 1, 2010.
It would appear from reading this statement that it may be possible for a limited number of buyers to qualify for both credits. Not only would the terms and timelines of your purchase need to be perfect, but you would need to meet differing criteria for eligibility for each program as they are constructed very differently.
Otilia called the Franchise Tax Board and they recommended that each buyer call to confirm if they are eligible for the state credit. As always we recommend that you consult your CPA for more clarification. They may need to call the state too! Please feel free to email or call us with any further questions!
(NOTE: Today I welcome Otilia Sullivan of Princeton Capital, as a first time contributor to Wine Country and Horses. Otilia has provided sage mortgage advice to many of my clients and I trust her ability to find the right mortgage for my clients in a timely manner. She is extremely knowledgeable about the mortgage markets and what it takes to qualify for a home, or to refinance. Since there are so many changes on nearly a daily basis, please don’t hesitate to contact us with any questions you might have.)
Don’t forget that the end of the federal home buyer tax credit is in sight. This credit provides $8,000 to first time home buyers. First time buyers are defined as those who have not owned a home in the previous 3 years, so the government’s definition might be different than yours. The credit also provides $6,500 to current home owners.
We have heard nothing about any extensions. Borrowers need to be in contract by April 30 and close by June 30. Click here to find the details of the federal tax credit, or ask your CPA if you qualify.
Also the Federal Housing Administration, or FHA upfront Mortgage Insurance Premium (MIP) is increasing from 1.75% to 2.25% with case numbers issued after April 5. Many first time buyers in the North Bay are using FHA loans since the credit restrictions are not so steep, and the down payment can be as low as 3.5%.
So if your loan is $200,000.00, your MIP would have been $3,500.00 last through April 5th. From today on it will change to $4,500.00. This is not an out of pocket cost. It is rolled into the loan payments, but nonetheless it is an expense of the loan.
There is a lot of talk about how people can take advantage of the newly revised $10,000 California State Homebuyer Tax Credit. We will discuss the pros and cons in our next post! If you can’t wait till then, here is a link to the California State Franchise Tax Board’s latest memo on the revised credits.
Today’s rain should clear up and bring sunny skies and warmer temperatures for the second weekend of this year’s Barrel Tasting Event sponsored by WineRoad, a group of northern Sonoma County wineries from the Russian River, Dry Creek and Alexander Valley appellations. If you are like me, perhaps your first exposure to the Sonoma wine country and our gorgeous back roads came from visiting friends during tasting events such as this. After many repeat visits, you begin to think, after a long weekend of wine tasting, gee, if I lived here, I’d be home by now. Last year, hundreds of home buyers in Sonoma County shared that sentiment, moving here from the Bay Area to Los Angeles, New York, Japan and Europe. I love to work with out of town buyers seeking the wine country lifestyle, feel free to contact me if you would like to explore the possibilities, and cheers!
Meanwhile–this video does a good job of capturing the flavor of barrel tasting weekend, and has scenes shot last week at Joseph Swan, Bella, Stryker and other Sonoma County wineries.
Good blog buddy, Dave Blockhus, of Coldwell Banker in Los Altos, recently shot this video overview of a home sale on the courthouse steps in San Jose. It is about 4 minutes long and provides a example of auction action occurring all over the US, including Sonoma County.
There were so many home auctions in Sonoma County during the past year that Sonoma county is asking auctioneers to move their business elsewhere as they are clogging up the hallways of the county buildings. Cash investors with certified funds are the only ones welcome at these sales and they are out in force. Fully 18% of homes sold under $500,000 in Sonoma County were cash sales. I am guessing most of those went to investors.
Many of the new listings since Christmas have been bought at auction (and some off the multiple listings) and are being remodelled and flipped by investors. I am seeing homes purchased for $250,000 to $350,000 (cash and as is) for example, which are brought back on the market in 60 to 90 days.
In a typical scenario one of these homes closed in November or December. A construction crew moves in to put in new flooring, baths and kitchens, paint inside and out, lay some sod and voila-the house is back on the market in 60-90 days, staged and price from $400,000 and up. Some investors are doing a really nice job with quality work, employing crews that might otherwise be working on new home construction. Others are doing the bare minimum beyond minimal cosmetics.
There are restrictions on the sales of these homes to FHA buyers, who comprise the bulk of the first time buyer market here in the county. These restrictions were just loosened January 15, 2010, effective February 1, so that a 90 day sale moratorium has been suspended for a year. Previously, an FHA buyer was not eligible to purchase a distressed property less than 90 days after it was previously sold.
More restrictive appraisal and valuation methods will continue to apply for FHA buyers interested in these homes. If the home is priced more than 20% over the previous sales price, the FHA lender will require either a secondary appraisal or an itemized list of improvements to justify the new higher price.
One property I saw recently in Sebastopol on a half acre was purchased at auction for $350,000. The investor put in $60,000 dollars worth of work, staged the home and it went on the market 60 days later. Went into escrow day 1 on the market, listed at $535,000. Clearly there is money to be made in these short term flips, and also a market for quality remodels smartly done. You must closely evaluate and inspect the improvements yourself as a buyer to make sure the new price is justified.
Meanwhile thanks to Dave for his informative video. I don’t think he got an Oscar nod yesterday but he does provide a nice show and tell about home auctions. (FYI: I did a post a couple of years ago about a different type of auction on a grander scale. You can find it here.)
With 2009 moving into the rear view mirror, there has been much speculation among agents, clients and the press about 2010 and what portends in the housing market. Inman News recently published a sobering assessment of the events that will impact real estate markets in 2010, from increasing mortgage rates, tightening FHA credit standards, high unemployment and the expiration April 30th of the buyer tax credits.
Real estate agents and brokers typically look forward to spring as the season where homebuyers come out in force and sales pick up.
In 2010, the uncertainty created by the financial crisis makes it harder to bank on a seasonal uptick in sales — particularly in markets hit hard by unemployment.
Further complicating matters down the road are three potentially destabilizing events that are expected to occur in a tight timeframe during the spring buying season:
* At the end of March, the Federal Reserve is expected to wind up a $1.25 trillion program that’s kept mortgage rates low.
* The Federal Housing Administration’s announcement that it plans to tighten underwriting standards could take effect as soon as April.
* Congress is expected to allow the newly expanded homebuyer tax credit to expire, closing the door on buyers not under contract by April 30 and closing by June 30.
Economists must rely on a certain amount of guesswork in predicting what impact these changes will have when drawing up their forecasts for 2010. Many expect unemployment won’t peak until next year, and it’s almost certain mortgage rates can only go up from record lows.
But housing was hammered so badly, and for so long, that most forecasters expect housing prices to stabilize and sales to pick up in 2010, even if economic growth doesn’t spring back as fiercely as it usually does in a recovery.
“We are definitely in a recovery now, but this has been such a severe recession — we think the financial crisis and the credit retrenchment that’s occurred means this is going to be a fairly anemic recovery,” said Michael Fratantoni, the Mortgage Bankers Association’s vice president of research.
America has moved from a manufacturing to service-based economy, meaning “there’s not as much potential for a snapback” from a recession like the Reagan-era boom of the 1980s, Fratantoni said.
These events certainly will impact markets nationwide, but each area will respond differently. Many of us think that buyers will continue to feel urgency in Sonoma County to avoid rising rates and the expiring tax credit. Certainly, inventory is in very short supply and buyer activity has been surprisingly strong during the holiday period.
Plus, Sonoma County will continue to be perceived as a more affordable alternative to housing in Marin County and the rest of the Bay Area to the south. No one knows for sure how the shadow inventory of foreclosed homes will affect our markets. How many of them will reach the market, and at what rate?
What do you think 2010 will bring?
And most of all, Happy New Year! Thank you for your business, referrals and friendship in 2009. I look forward to working with you in 2010. No matter what condition the market, there are opportunities in real estate if you have patience, think long term and have good planning on your side! If you have any questions about buying or selling a home, please contact me and I will be glad to help you!
Many many home buyers in Sonoma County live out of the area–they buy second homes here, they are relocating for work, or want to experience life in the wine country first hand.
Many home buyers, even if they are local, conduct much or their search on line. Why not have as much of the purchase transaction paperwork be conducted on line too?
This struck home this afternoon as I prepared an offer for out of town clients to sign. Their scanner was older and it was not easy to assemble the pages to fax back to me–believe me I had the same problem before I got a new scanner. What a tedious process for them!
Or I have had illegible faxes come through as a result of too many generations of faxing and scanning of counter offers and counters to counters, ad infinitum. Every one involved tears their hair out and runs around wasting time on mechanics of the paperwork, when it is the content of the documents that is most important! Pretty silly.
Enter the paperless transaction, beginning with the electronic signing of contract documents. It is easier than it might sound! What is an electronic signature?
An electronic signature is any legally recognised electronic means that indicates that a person adopts the contents of an electronic message.
There is a better way. Our new paperless transaction system at Prudential California Realty will be rolled out company wide in the first quarter. Hallelujah!!!!!! So many trees will be saved and countless hours chasing paperwork with also be saved by realtors and their clients.
My client asked me about electronic signing–what does it mean? What does it look like? What are the basic facts? You can click on the link above for a Wikipedia article about the concept of electronic signatures.
For more specifics, here is a link to the system we will be using, Docusign by Ziplogix.
Here is a brief (2 minute) and not too fancy overview of how you, as a buyer or seller, would use Docusign to sign documents electronically. I’ll have more posts about the whole process of greening the real estate transactions and preventing grey hairs for all the parties involved!
If you are searching real estate on line (and who isn’t?) it is easy to be confused about the availability, or sales status, of properties, when you are focused on important details like price, location and pictures. It helps to be familiar with the terms.
After all you don’t want to get excited about a property if it’s status is “Pending.” “Contingent/Release” doesn’t mean that the property has been released back into the market.
If you are a seller evaluating the competition for your property when it goes on the market, it can be useful to see how properties are moving, so keeping an eye on alternative status’s (beyond active) can provide insight in to the velocity of the market for your type of home.
So let’s do a little primer.
( A word of caution: Be aware of the source of listing data on the site you are searching. If it is not a direct feed (IDX feed) from a Multiple Listings Service, the data (especially status) may not be accurate. Many sites such as the websites of print publications and other aggregators are not necessarily up to date.)
This means that the property is technically fully available, i.e. a purchase contract has not been “ratified” by an able buyer and a willing seller.
Further caution. When is an active listing not really active? Some short sales and foreclosure (REO) properties may have multiple offers on the table and not be accepting further offers, but the parties have not fully ratified the purchase agreement and bank addendum so the status is not showing as Contingent. This has been a source of friction between MLS’ and listing agents for these properties. It is a murky area because until the contracts are ratified, technically the property is active.
It is a good idea to ask your agent to check the agent confidential remarks to see if additional offers are being accepted. These days, with so few homes for sale, I generally check with the listing agent to determine availability for the properties my clients are most interested in.
CONTINGENT, CONTINUE TO SHOW
This status means that the buyer and seller have come to terms and ratified a purchase agreement, but that the buyer has made their offer subject to the removal of certain contingencies, which can include, but not be limited to:
Loan Contingency- Both the property and the buyer need to be fully approved qualify for a loan.
Appraisal Contingency- This optional contingency is added protection for a buyer in cases where the appraisal is not sufficient for the bank to approve the property at the agreed upon purchase price. (Note:technically all contingencies are optional, but I don’t advise buying a property with no contingencies. We do see that when the market is red-hot in certain markets in the Bay area but it is NOT a good idea.)
Buyer’s Investigation- This is also known as the Inspection Contingency and can cover any item the buyer deems relevant to satisfy themselves in depth about the property: it’s structural integrity, the neighborhood, etc. Generally inspections include termite, contractors, well & septic (if applicable), natural hazards, public records and databases, title report, etc. It also means if you want your great aunt Minnie to see the property and give her approval prior to your purchase, that is your right. You could have a feng shui expert look at the property, it is up to you as the buyer to satisfy yourself that the property is right for you. This is a big subject which we won’t cover in full here.
There are other contingencies such as the buyers right to review seller disclosures, preliminary title reports and property tax bills, etc.
All of the timeframes for these various contingencies are specified in the purchase agreement. Standard terms are 17 days in the California Association of Realtors (CAR) contract, but their existence and their length are completely negotiable. What you as a buyer submit in your offer depends on the deal strategy you and your realtor are employing. Timeframes can be extended indefinitely, as long as both parties are in agreement and the extensions are specified in writing.
Once the buyer is satisfied that all their investigations are complete, the loan and appraisal are fully approved by the lender, all systems become “Go” and the deal goes…..
This status is usually a shorter time period, but not always. Now it is just a matter of time, specified in the purchase offer, until the deal closes. Buyers need to sign loan documents, sellers need to sign their documents, the lender gathers their final “prior to funding” documents, documents are reviewed by the lender, insurance and other bills are presented to escrow, until all the pieces fall in place and the deal can be released to recording at the county. In Northern California, there is no formal closing event as their is in other parts of the country. Every area has their own customs. Once the deal is recorded, the property transfer is official and the property status becomes…..
SOLD That should be pretty self-explanatory. The agent remarks in the MLS should note the type of financing, any seller concessions and sometimes an atta boy to the buyer’s agent for doing a good job!
I’ll look at some of the other status types in the next few days. Please let me know if you have any questions,and thanks for stopping by!
But what about Sonoma County and Northern California? If you read this article in the business section of today’s New York Times, An Upturn in the Housing Market May Be Reversing – NYTimes.com you’d find very justifiable skepticism about the increase in real estate sales volume nationally that we’ve experienced this summer and fall. As some friends and I discussed at dinner in Healdsburg Monday night, no one is convinced that the economy is on firmly recovering footing, Wall Street enthusiasm aside. So are we up for a “W” recovery–meaning another downturn in housing prices? From the article, which discussed the latest Case Shiller Housing Index Report:
The two housing price reports lag, by a month, the figures on the volume of home resales, which were issued Monday for October. Home resales jumped 10.1 percent to the highest level in two years, better than analysts had expected.
Much of the increase was attributed to the $8,000 first-time buyer’s tax credit, which had been set to expire Nov. 30 but has been renewed through spring. Buyers who have already owned a home are now eligible for a $6,500 credit.
While brisk sales volume should, in theory, push up prices, Maureen Maitland, the vice president for index services at S.& P., said the oversupply of inventory was acting as a brake. “You can look down the street and have 10 houses to choose from,” she said.
About 3.57 million used homes are for sale, a number that has been declining but is still higher than the historic average. It represents seven months of inventory at the current sales rate.
Ms. Maitland speculated that the housing market might follow a “W” pattern, as the price lows plumbed last spring are tested again this winter.
It’s all well and good to look at national statistics, but (and this is a cliche so forgive me)–looking at the national housing market to try to determine what is happening with home values in your neighborhood is like trying to know what the weather will be like by knowing what the average temperature in the US is at any given time. Just look at the paragraph above–7 months available inventory nationwide.
In Sonoma County we have less than three months of inventory available county wide, and less than two months at the lower price ranges. Even at the upper price ranges we have about 10 months of inventory and I suspect that is changing as we speak. Next week I will take a look at the market for properties priced over a million dollars. (In Sonoma County that would be considered high end.) In southern Marin, Palo Alto, Piedmont or San Francisco $1 to $2M for a house will get you a tract house or nice condo.)
I have been struck by how active our market currently is, and how many properties at the mid to upper price ranges have been selling in the last month or so, after laying dormant for so long. I think buyers in those price ranges are perceiving good value and striking quickly when they see what they want. A property closed in Healdsburg yesterday: the quintessential wine country farmhouse on 12 acres in Dry Creek Valley, pool, nice house, vineyards, wrap-around porch. It was listed at $2,650,000 and received four offers, selling for $2,825,000. I am told there was a backup offer over the eventual sales price.
Another stylish property on acreage with lavendar and olive fields in Sebastopol, sold recently after receiving four all cash offers, for about $1.7 M. Stylish properties, well-priced with classic locations and settings, are finding that there are buyers out there who have decided that it is again time to put there money in wine country real estate. I am also hearing the same kinds of stories from agents in San Francisco, the East Bay and the Peninsula.
Will this last? How will values be affected? It is too soon to tell, but interesting to signs of life in parts of the market that were dead most of this year. One factor which encourages me is that the tech companies in the Bay Area are experiencing sales growth, venture capitalists are investing in startups again, and the IPO market has some life, witness the succesful IPO earlier this year for Open Table. Facebook is starting to take some steps along their path to a public offering–all those factors are positive ones in our Bay Area economy. After so long a time of negative news and still a lot of hard times for many people, there do seem to be some glimmers of hope. And as I noted in one of my earliest blog posts a couple of years ago, the rising Bay Area real estate tide definitely floats Sonoma County’s real estate boat.
Google has added property search of current real estate listings to Google Maps. You can go to Google Maps and search a community, even add in your criteria in terms of beds/baths/etc. and the map will highlight current listings and display detailed listing information on the left hand column–Google provides a video overview below.
I thought I would check it out for accuracy. I ran a search for Healdsburg and found a property listed for $639,000. which was news to me as I have clients looking for something like that–I follow all the key markets in Sonoma County regularly on the search for new inventory and sold results.
So I clicked through to the property info and it turns out the listing was on Piper Lane in Sonoma! Somehow Google pulled the listing info, stripped the town of its Sonoma address (about an hour away) and added Healdsburg to the property address! That’s one way to get new inventory! (not) Very misleading.
It also picked up a listing in town on North Street which had four lots of about 25 acres each. Not possible–that would swallow the whole town of Healdsburg. When I clicked through the property links I found an empty page on a local broker’s site. And these are only the first two errors that I saw. It appears that data is pulled from a variety of sources, including print magazines and other listing aggregators such as ListHub. All I can say is don’t go to the bank on what you find because it can be very erroneous. Obviously the search itself is not ready for prime time but also the data being searched is unreliable. Garbage in Garbage out. Until there are agreements with regional MLS’s (don’t hold your breath) take the real estate information offered on Google Maps with a grain of salt.
Listings by Community
- Market updates
- Building and Remodeling
- This and That
- West County
- Country Property
- Horses and Wine Country
- Finance and Lending
- Wine Country Living
- Real Estate 2.0