Agents: AFTER Service, THEN Paid

Here’s a fantasy thought: “What if our teachers, doctors, or politicians only got paid AFTER they finished their service, to their client’s satisfaction?” And, the professional gets paid nothing until those they serve are satisfied with an acceptable conclusion. Can you imagine?

Abraham Lincoln said:  “A lawyer’s time and advice are his stock in trade“.  Their income is based on two ‘tools’ used to serve their clients: their time and advice (knowledge). 

It seems many people don’t stop to consider how their real estate professional gets reimbursed for their time and knowledge.  Perhaps, because the client is on an hourly wage or salary, they assume agents must have a similar revenue basis?

Your real estate agent typically receives no reimbursement for their expenses (gas, time, advertising, time, promotion, time, etc.) until several days AFTER their client’s escrow closes.  If the sale does not close through him/her, the agent gets nothing for their ‘time and knowledge’.

Just imagine: At your job you don’t get paid  until you completed all of the tasks.  If there is no successful conclusion to your work, you get paid nothing. You might understand agent’s frustration when that happens to them.

Oh, and BUYERS, you typically pay nothing for your agent’s services – the seller does, through their contract with the listing agent. Make sure you have an experienced agent with a proven track record to represent you. They will “cost” you the same as a rookie agent will – zero.

College Student: “Should I Buy or Rent?”

A college student posed this great question in Trulia: 

“I’m a college student looking to move to Sac this winter. Should i rent or buy? Property around Sac State is expensive…  I need some help on what i should do cause renting is more expensive then a mortgage would be”.

Here was my response:

I would buy if you can.
Why not email me these basic items and I will tell you how much of a loan you can qualify for and what your payment options are:
1. Gross, (before taxes) income year-to-date and for 2013;
2. Amount of cash you have for down payment & costs (including family gift $);
3. What is your minimum, monthly, required debt payment for all, unpaid card balances, car loans etc.;
4. Whether you have had any late charges, or collections.

I will email your results back along with a couple of outstanding, buyer-real estate agents contact info.

Same offer to anyone: you could send me the same info and I will provide you with the results listed above.

Hollister Homes Highest Value Gain

Hollister, CA

Of the 3 cities which make up ‘ South County‘, the City of Hollister, CA single family residences saw the highest appreciation from 1st quarter 2013 to 1st quarter 2014.

The average Hollister single family residence (SFR) value rose 23.1% whereas Morgan Hill, CA experienced 21.9% and the City of Gilroy, CA saw their SFR rise by 11.2% from 1Q13 to 1Q14.

However, Hollister’s typical SFR value dropped 43% from 1Q07 (when many say the bubble burst) to 1Q13. Morgan Hill dropped 32.5% and Gilroy 30.6% during this same period.  Hollister’s ave.  SFR value in 1Q07  was $302,383, down to $240,798 in 2013 and up to $274,309 1Q14.

Another indicator of Hollister’s recovery is the time it takes homes to sell.  The average days on the market in 2007’s 1st quarter was a whopping 148 days.  In 1Q13 the time dropped to 124 days on the market.  That is a 69% improvement!  Then, this year we watched the average days on the market drop even further to 24.

Finally, the average Sales to List price ratio was 99.5% in the 1st 3 months this year compared to slightly over 96% in both ‘o7 and ’13 first quarter.  They are selling faster and virtually at their asking price.

What do you think this trend will do?

(data source: MLSListings)

Home Prices in Gilroy, CA

City Gilroy

Gilroy, CA is not only known as the “Garlic Capital of the World” but it is also known for its robust housing market.

Using the first quarter of 2007 (1Q07) as a high point in,  and the beginning of decline of market values, there are some interesting changes which point to a strong recovery:

The average number of days it took for homes to sell in 1Q07 was 141. Then, in 1Q13 it had dropped to just 36 days, and, 1Q14 days on market slipped up to an average of 45 days. Obviously, homes are again, selling much faster but the pace is slowing.

Gilroy CA’s average sales price for single family residences (SFR) in 1Q07 was an amazing $785,763!  By 1Q13 prices dropped to $544,965. In the year since, the average prices continued to increase: 1Q14, the average was $605,845.

Another indicator of a recovered market is the ratio of sales price to listed price. In 1Q07 the average was 97.7%; in the first quarter of 2013 it was 98.7% and in the 1st 3 months of this year it averaged 96.2%.  Again, 2014 is still improving but it seems at a slower pace.

Relatively speaking, Gilroy had the least significant drop in prices of the other South County neighbors: Morgan Hill and Hollister. Gilroy’s drop 1Q07 to 1Q13 was 30.6% while Morgan Hill’s was 32.5% and Hollister saw a 43% drop in that time frame.

So, what do you think values are going to do here in South County in the near future?

(data: MLSListings)

Smart Home Purchase = Good Investment

home's appreciationAfter nearly 8 years Americans are once again considering the purchase of a home as an investment.

As in all good investments you want to “buy low and sell high” with regard to your home.  As this article points out there are 4 key considerations when buying a home with “investment” in mind:  Don’t buy the nicest home in the neighborhood; look for a home which needs a little T.L.C.,; of course location is very important and plan on living in the home at least 5 years,.  10 years is even better.  Regarding location, look for a home in a nearby suburb of a job-rich metropolitan area and, off the main thorough fairs.  Morgan Hill, Gilroy and Hollister, CA for example, are ideal communities near the San Jose and Silicone Valleys.

The other side of the home buying equation is the financing of it.  With the goal of living there at least 5 years it actually pays to buy down the interest rate of your home loan.  If you pay 1.5 to 2.0 points (percent of the loan amount) you should be able to lower your rate by .25% for the term of the loan.   This little tax deductible investment will repay itself within 3 – 4 years through the savings in house payments and will save 10s of thousands of dollars in interest over the life of the loan.

Lastly, design your budget to allow an extra payment toward the principle loan amount.  Just an extra $100 or two paid with your regular payment each month will reduce the number of years you will pay on the loan and builds equity much faster.

Buying smart imitates the investment growth and the extra payments on points and principal will quickly grow your equity.  When time comes to move up or, out, you should have a sizable profit from your home’s investment.

What’s your ‘buy low sell high” success story?

 

 

Rent vs. Buy: Cheapest?

We know what the acronym A.S.S.U.M.E. really means, right?  Here is a good example: “Renting is cheaper than buying“. Simply assuming that paying rent costs less than making a house payment is ignoring many factors: the interest portion of the principle & interest and, the property tax portion of a house payment are tax deductible.  Appreciation also needs to be placed in the equation: rent payments will go up; home values (typically) go up while the house payment remains unchanged.

Would you believe this holds true even in San Francisco, Oakland and San Jose, CA?  As the attached article demonstrates, these and other cities have home purchase costs lower than paying rent.  In San Jose, CA for example, the difference is 9%.

If the rent vs. house payment debate wins in these large, metropolitan cities, we can assume (oops, here we go again) that the more affordable cities like Morgan Hill, Gilroy and Hollister, CA will have an even bigger difference favoring the purchase of a home vs. renting someone else’s.

Why not take a challenge?  Text or email me your city and the amount of rent you pay.  I will give your own comparison.

Another “Home of The Week” Beauty

When the members of the realtor association for the county vote for “Home of The Week”, that is a real compliment for the chosen home.  2441 Fairhaven Ct., Hollister, CA was given that title this week.  This 4 bd. 2 bth home is tastefully decorated and sits in a quiet, cul-de-sac with just 8 other homes.

Come by for the Open House on 2/1/14 from 1-4 PM.  Chocolate-chip cookies and a comfortable home wait your visit.

Nice 4 bdrm. Under $400k

frnt

Here is a clean, nicely appointed, 4 bedroom, 2 bath home on a quiet cul-de-sac with only 8 other homes.  

A nice park with playground equipment is a convenient stroll away. Likewise, the much sought after, Cerra Vista Elementary School is within walking distance from this home.  The newest shopping facilities are near by and the Hwy. 25 Bypass makes for an easy commute to the San Jose area.

There will be an Open House on 2/1/2014 from 1 to 4 PM.  Stop by to see this comfortable home and enjoy some warm chocolate-chip cookies.   This home is priced to sell and won’t be available very long. For your own personal tour of 2441 Fairhaven Court, Hollister just text, email or call me.

Housing Values At The Bottom Yet?

Remember when we were on a road trip with the kids in the car?  What was the question they always got around to?  “Are we there yet?”

Nearly every day people ask me the same question relative to home values: “Are housing values at the bottom yet?”  The answer varies depending the area you are asking about.

In this article Forbes provides mixed answers:  homeowners in the San Francisco Bay Area may “be there”.  Other places in CA and around the country, however, may have a ways to go yet before their house-value-slide ends.

San Jose was specifically listed as one of the few metro area where values seem to have leveled.  This continues to be good news for Morgan Hill, Gilroy and Hollister home values.  With the majority of South County residents commuting up into the Bay Area, home values in these three cities will continue to follow San Jose’s lead.

So, Johnny, we’re there –  but we won’t be returning to increased values for some time to come.

Needed Repairs vs. Short Sale

Our Veteran buyer had an approved short sale contract on a Hollister home.  The bank’s approval limited the amount they had to net from the sale.  There was NOT enough to cover all of the repairs from the termite company’s report.

The seller had no money.  Our buyer could not pay for any of the repairs.  The listing agent and I had already agreed to put up a portion of our commissions toward the cost.  Yet there remained a list of repairs to do.  At the close of escrow no more options were available.  We were at a stalemate.  

The seller offered to help to fix a couple of repairs with materials he already had.  I took the remaining list of items and figured out a plan to get them done.  I bought the necessary supplies, rounded up 3 others and on the Saturday before it was to close we spent 7 hours doing those repairs. 

With Western Exterminator’s pre-set re inspection on Monday morning and e-mailed clearance to the lender that same day we funded on the very last day possible. IT CLOSED!  The seller was freed up. My buyer bought a great home at a great price.  The listing agent and I got a little bit for our 4 months of work. Everybody came out okay.

Winston Churchill’s famous, 5 word speech comes to mind: “Never, never, never give up”.