Archive for March, 2012

$12,500 raised in 24 hours for local missing girl’s search

By Teressa Francis | March 30th, 2012 1 Comment

Through the Intero agents and employees, Intero Real Estate Services was able to raise $12,500 in just 24 hours to go towards the search efforts for Sierra LaMar, the Morgan Hill teenager who went missing last week.

The 15 year old girl was abducted from her neighborhood on her way to catch the school bus.  Search parties have been out looking for her all week.

The contribution was presented to Mark Klass (Father of Polly Klaas) and The Klasskid Foundation on Thursday by Cathy Jackson, Intero Foundation President and Kathie Kingston, who headed up the campaign.  The Klaas Foundation is assisting the authorities in the search.  The money will go towards flying in professionals and experts, getting more search dogs, buying more walkie talkies and other need supplies as well as food for the search teams.

“The purpose of the Intero Foundations is to positively impact the well-being of the children in the communities we serve. I can’t think of anything more worthy and in line with our cause than this.” States Cathy Jackson.  “We’re just happy we could help.”

To help in the Search for Sierra LaMar, visit their facebook page

Review Marc Klass’ post on his blog, The Klaas Act, reviewing the moments yesterday both Cathy Jackson and Kathie Kingston came to donate the money collected.

For more information about the Intero Foundation, visit their website Interofoundation.org.

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Luxury Insider: Open House in the High End?

By Alain Pinel | March 28th, 2012 0 Comments

I often hear from both home sellers and real estate agents that it is neither appropriate nor recommended to hold an open house for the public if the subject property is a multi-million dollar luxury home. In fact I heard the comment so much over the years that I almost got to the point of believing it! Well, I still don’t, generally speaking.

Before I dig deep into the arguments which may be used to validate one side or the other, let me state clearly that I understand the difference between an estate-quality property and a more standard home. I made a good living understanding and leveraging such difference. The marketing strategy and scope are indeed altogether different because we are not dealing with the same buyers, in terms of means and needs. That’s why Intero has a “Prestigio” Division, by the way.

However, if we agree to keep things simple, we will probably agree that, irrespective of means and needs, buyers, in all price ranges, are…buyers. They share the same emotions and desires. The same thing can be said of sellers. Principals, on either side, always appreciate when we make their objective easily achievable.

If they wish to sell, their chances of winning largely depend on the number of prospective buyers who get to see the house. If they wish to buy, their chances of finding the right home largely depend on the opportunities they have to access and visit any given property. That is of course the value of the open house option.  It is easy: buyers can look at various homes, with or without the family, whenever they have a little time and when they are in the mood.

Of course Realtors are best to guide buyers through the maze of options and explain the pros & cons of each location and property. Still, sometimes it is fine to stroll around town, relaxed, and do home shopping as we do window shopping in a mall. My wife loves to do both!

So what’s wrong, if anything, about an open house in the high end?

Here is a list of the legitimate arguments being presented by the critics or the skeptics, followed by the counter-arguments, whether legitimate or not:

  • “It makes no sense to have an open house in my price range” – Maybe it does not but we should not disqualify the option. The open house could very well be attended by…wealthy people too.
  • “My house is way too large to be held open” – If it is too big for one agent, it might not be for two agents. If pertinent, we can plan for three agents to be present.
  • “I would rather have my agent welcome visitors and show them the house” – Sure, and this is exactly what is likely to happen, but this preference should not necessarily eliminate the open house option.
  • “I don’t want undesirable people to see my house” – This one is a little tougher since we cannot judge people on a quick look. A wealthy friend of mine was prevented one day from  entering The Ritz (where he had a room for the week) in Paris because he wore jeans! .. He canceled his reservation…  Of course, on the seller’s advice and his consent, we can demand name, contact info and even proof of identity to visitors whenever needed.
  • “I have too many valuables” – When a house is for sale, whether open or not over the weekend, there are elementary precautions to take to reduce or avoid altogether the risk of a visitor stealing pricey objects.  Anything small and of great value, such as jewelry or art should not be offered to the eyes, they should be under lock or in a different place.

The open house option adds a new dimension to the marketing of a property. Many homes, regardless of price, sell on open house or as a direct result of an open house. This option needs to be discussed with the agent on a case by case basis and never arbitrarily be discarded. Good luck.

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Intero Insider: Who’s Buying?

By Gino Blefari | March 28th, 2012 0 Comments

Here in the Bay Area, the answer to the question “who’s buying homes?” seems to be a resounding “employees of all the hot tech companies” – Facebook, Zynga, Google, Oracle, Apple – the usual suspects. Yes, we are indeed blessed with a deep economy that seems to be creating many more jobs than you see being created in other parts of the country.

When it comes to the nation as a whole, the answer to who’s buying right now is mostly investors and first-time buyers. According to the National Association of Realtors’ latest monthly housing statistics, investors purchased 23% of homes in February, up from 20% the same month a year ago and unchanged from January. Meanwhile, first-time buyers accounted for 32% of purchases in February, down from 34% the same month a year ago and 33% in January.

Where are they buying?

Sales were up across the country in February compared to the same month a year earlier. However, not all regions saw increases from the previous month.

At the regional level, the Midwest came out on top in February (which is unexpected, given that it’s the middle of winter – typically not a favored time to buy or sell a home). Existing-home sales were up 13.3% in February from a year ago to a pace of 1.02 million. Sales were up 1% from January, and the median price in the Midwest was $120,500.

In the South, sales were 9.3% higher than a year ago, and .6% higher than January at an annual pace of 1.77 million. The median price in the region was $138,100.

Here in the West, existing-home sales were 6.1% higher in February than a year ago, but were down 3.2% from January to an annual pace of 1.22 million. The median price in the region was $195,300.

In the Northeast, sales were up 5.5% from a year ago, but fell 3.3% from January to an annual level of 580,000 in February. The media price in the Northeast was $225,800.

What are they buying?

The Realtor group said that all-cash sales increased to 33% of transactions in February, which leads us to believe that a third of buyers may be buying investment properties since investors account for the bulk of cash transactions.

Of the February sales, single-family home sales were 9.4% higher than a year ago, but 1% lower than in January. Existing condo and co-op sales were 3.9% higher than a year ago, but unchanged from January.

What can we surmise from all these statistics? The important takeaway is that this year is starting off stronger in most regions than last year. In fact, February – historically a weaker month of the year for home sales – seems to be acting much like spring in terms of the strong pace of sales. Remember: slow and steady is the name of this recovery. So far, the numbers support that prognostication.

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The Luxury Insider: Pricing Tactics…Or the Art of Juggling with a Grenade

By Alain Pinel | March 21st, 2012 0 Comments

One of the oldest and still challenging question both home sellers and their listing agents dread the most (aside from the commission issue…) is “What price should we put on the listing to produce the best price in the end?” You all have been there before, right? Most of you did fine; many did not and wished they had used a very different approach, if only they had known; if only they were given another chance.

The choices have always been and will always be the same:

  • Overprice
  • Underprice
  • Price at what is perceived to be “market value”

The problem with this question is that there is no magic recipe that works every time. It depends on the market, it depends on the property and it depends on the marketing. Let’s look at the three options and briefly analyze the pros & cons of each one.

  1. Overpricing: Hard to define what is an overpriced listing. As far as I am concerned, an overpriced listing is one that does not sell!  In other words, a property is not “overpriced” if a buyer buys it, even if we thought it was when we put the For Sale sign in the front lawn. The supply & demand dance can do strange things in a good market. Want an example? Look at what happened in the Silicon Valley over the last 3 months: very little inventory, huge pent up demand, cheap mortgage money, reassuring economic news, more stable job market, rich IPO’s on the horizon, etc. Results: in the mid range of the market, around $1M+, selling prices probably jumped 5 to 10%. It means that if a home was listed in January 5/7% over what we considered to be a “reasonable” price, it could have sold at full price in March. Now, before you get too carried away, let’s use a little wisdom that only experience can provide. In the real estate business, the past is not necessarily a good guide to predict the future. It is not because prices have jumped yesterday that we can count on the same thing tomorrow. What we can say, looking backwards, is that if a house in that region has been on the market more than a month and did not sell yet, chances are it is indeed overpriced. Overpricing, in any market, is a dangerous idea. In my book, it is a terrible idea and entirely counter productive. If and when the property sells, after repeated price drops, it almost always ends up selling for less than otherwise it would have, had the price been more realistic from the start. If the market is hot but the house does not move quickly, it will soon grow old and collect dust, as Realtors will always prefer showing new listings rather than those which have been aging on the shelves. So much for overpricing. Your choice.
  2. Underpricing: Talk about dangerous games!… You must have a strong heart to deal with this option. It can work to the sellers’ benefit, occasionally. It can hurt just as well. In the hot market we have been enjoying for a little while in the Silicon Valley and many other markets throughout  the US, underpricing is getting to be as popular (and risky) as bungee jumping. The idea is to tease anxious buyers with a price 5 to 10% lower than what we perceive to be the market price and manufacture a bidding war which will result in multiple offers and ultimately a sales price well over the asking and over what we thought the house would normally sell for. Some agents make a good living (for the time being) advising their clients to take a chance with such tactic. They may even draw some pride and good PR from the fact that their listings routinely sell at a higher price. That, of course, is a bit deceptive since it is a deliberate strategy designed to accomplish exactly that. Keep in mind that underpricing does not guarantee a higher price. It could go the other way. You might get stuck with a low price and no good offer. You could also have an appraisal problem, depending on the financing, because of the resulting inflated price. Do I favor this option? No. I just don’t like to play games. Your choice.
  3. Pricing at “market”: If you, as a home seller or as an agent, think you know at what price a buyer and a seller are likely to come to terms, in any market, because you have a bunch of reliable comps (recent local sales of similar properties, active listings…), I suggest you use that option rather than play with a grenade. You may put a tiny cushion on top of the price to allow for possible negotiation. If the price is too high, you will soon know and you will trim the excess fat right away. If the price is too low, well, you may benefit from an unintended buyers’ frenzy. If the price is right, you will likely obtain a quick & easy sale. A win-win. I like that scenario and I bet you do too. We all sleep better when we do it this way. Again, your choice.
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Intero Insider: Why Rising Rents Could Signal Positive Gains in Home Values

By Gino Blefari | March 21st, 2012 0 Comments

It’s a classic tale of supply and demand: home purchases soften and rental markets in return heat up. People have to live somewhere and when the market for buying becomes unattractive or grows out of reach, they turn to renting (or to moving in with friends and family). But what’s the lasting impact on home values?

Contrary to what you may think, a hot rental market does have a positive effect on housing. Why? Because as rents trend up and show stable income for landlords, more investors see the opportunity in snapping up rental properties. This interest and activity takes low-priced inventory off the market as investors move in and buy, eventually helping to put a bottom under the value of all homes in the local market.

In addition, rent can only heat up so much before it starts to become unattractive cost-wise and renters again turn to buying.

Zillow covered this aspect of rental market dynamics in its latest activity report, which showed that median rents rose 3% from January 2011 to January 2012. While that same announcement last week noted that home values continued to fall during the same period – declining 4.6% – the company’s chief economist noted the impact on home values as ultimately a positive thing for all the reasons mentioned above.

Zillow found that 70% of markets across the U.S. saw an increase in rents, while 7% experienced home value increases.

The main takeaways here are this:

  • If you have cash and are looking to invest, investigate your local real estate market for rental property opportunities. Rents are rising and demand is still high, meaning it’s time to dive in if you’re going to dive in.
  • Renting may be reaching a tipping a point in some markets – meaning that the cost is getting high enough to convert some renters to buyers as they see more value in owning.
  • Some positive market underpinnings are rearing their head as increasing rents can lead to more stability in local market home values.

Housing market stats are tricky. Many conclusions are not always obvious at first. This is why we must always read past the headlines and dig deeper into the meaning of specific market activity to get more meaningful forecasts to inform our decisions.

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The Luxury Insider: The Tale of Two Cities…

By Alain Pinel | March 14th, 2012 0 Comments

What about an easy multiple choice quiz to start the day? Here is the question: How is the real estate market at the high end today?

a)     very good
b)     good
c)      bad

OK, so maybe the quiz was a little bit unfair since it was one answer short: the right answer is “all of the above”.  How can this be? Well, the answer really depends on the famous “location”- “location”- “location”: the specific state, the specific region, the specific town, the specific district, perhaps the specific street or even which side of the street. It is that complicated.

Today, with all the uncertainty still reigning over the national economy, the job situation and the dark clouds blanketing much of Europe, people are looking for security for the money they can invest, because buying a home today is more than putting the family under a roof, it is indeed an investment. It can be good but it can also go bad.

With the sudden revival of the high end market, the pricey towns, the “money towns”, are very much wanted under the circumstances. Typically, real estate values there are more stable over time, because of a multitude of factors: school ratings, zoning homogeneity, setting desirability, not too far from the work hubs, etc…Not to forget the encompassing reason: that’s where people who have lots of money want to live. Period.

Palo Alto, in the heart of the San Francisco Peninsula, is a great example of the phenomenon. The median price there is about $2M. That market is hot, which corroborates our predictions. Listings don’t stay on the books more than a few days. Multiple offers are the norm.

Does it mean that the entire Peninsula is feeling the same heat? Not necessarily. Not yet in any case. It will happen though. The fever from the high end is progressively spreading into the surrounding areas like ink on blotting paper. How far and how long it will spread is still an open question. Looking at the map of the Bay Area, we see a significant difference between the hot Peninsula & South Bay, the warming up East Bay, and the North Bay which, aside from the buzzing traditional pockets of wealth, is mostly lukewarm. Some regions, where distressed properties represent the lion’s share of the market, are still a bit cold and may not catch the fever before next year.

The tempo at which it will spread is also an interesting point. For example, we see that in the select high end towns, a large percentage of the winning offers are over the asking price, while outside of the best zip codes, winning offers are still below asking even though multiple offers are becoming more common.

Last observation about this evolving market on the Peninsula: so far this year, the most active price bracket has been the bottom segment of the high end, between $1M and $1.5M. It is gradually moving to the next level, over $2M and up to $3.5M. We can realistically expect that the top end, from $3.5M to the moon will be sizzling by springtime.

If you are in the mood to buy, it would not be a bad idea to act on your desires now. If you are in the mood to sell, the time is ripe too: you may have buyers waiting to make you an offer you cannot refuse.

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Intero Insider: What the Housing Affordability Index Really Says about the Market

By Gino Blefari | March 14th, 2012 0 Comments

Perhaps the single best side effect of a slow housing market is the positive impact on affordability. In the most recent affordability report from the National Association of Realtors last week we learned that housing affordability conditions in January reached the highest level since they began tracking it more than 30 years ago.

NAR’s index is based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the average family’s purchasing power. In January, the index was 206 (an index of 100 is defined as the point at which a median-income household has exactly enough income to qualify to purchase a median-priced home).

What does this mean? The obvious conclusion is that now is a great time to buy a home – if you can afford it and qualify for a mortgage, that is.

However, it’s also good to remember the context of this news and that everything’s relative (read: local) in real estate. I say that because many of our Bay Area markets have been seeing price increases, bidding wars and conditions that may make area buyers conclude that it’s really not so easy to be a buyer these days after all. Unless you’re lucky enough to be paying cash, it can still be extremely tough to get a loan that will cover the cost of an average home around here.

Affordability is an important figure, for sure. But I just want to point out that when taken at the national level, there’s not much of a story to tell. Just because housing has been deemed “most affordable” since 1970 doesn’t mean markets have hit bottom in terms of pricing. Some are actually enjoying highs above recent years. And others will continue to struggle for another year or two at least – as long as their foreclosure situations remain serious and job markets weak.

Affordability is important to the health of markets. But affordability itself really comes down to individual financial situations. Can you afford this home right now and going forward? These are the important questions buyers always need to ask – regardless of market conditions.

So if you’re a buyer or seller paying attention to news headlines like this one, remember to always think locally to find the right context. Yes, housing is the most affordable it’s been since the ’70s at the national level. But that means nothing to your city or neighborhood, which may be experiencing an amazing boom compared to years past – or still lagging behind due to other circumstances.

Affordability in real estate is always relative.

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Best of Both Worlds for Alain Pinel

By Teressa Francis | March 9th, 2012 0 Comments

Back in the bay area, Alain Pinel is getting more local exposure for Intero Real Estate Services.  Check out this weeks interview in The Almanac to hear about Alain’s journey to Europe and back.

Best of both worlds for Alain Pinel

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The Luxury Insider: The Top Guns are Back!

By Alain Pinel | March 7th, 2012 0 Comments

Can any agent sell a multi million dollar residential property? Theoretically Yes… Practically: not readily, aside from “accidental” business. It takes a very special person who can relate to the client and the subject property at that level. Not every agent can play the part and be a maestro at comfortably managing the entire transaction with the clients’ trust.

There are lots of Realtors, thousands of them just in the heart of the Silicon Valley. I feel fortunate knowing a good portion of them and I would not hesitate to say that most of them are very good at what they do, irrespective of the company affiliation. They are smart, knowledgeable and genuinely devoted to serving their clients and customers to the best of their ability. They do care about their fiduciary duties.

That, of course, does not mean that they are equal and interchangeable. Some are better than others. This is especially noticeable in the high end.

If I were to generalize a little, I would say that there are three classic levels of real estate professionals. Some gravitate from one to another during the course of their career, while some get stuck in the same box if they cannot or don’t care to change their profile. Here is the picture, painted with a very big brush to make the point:

  • The Average Agent: Sincere, friendly and committed to the principal’s satisfaction, but usually a train too late in a fast market to be truly effective and therefore successful. Typically, he/she waits too long to preview the new listings when they are fresh on the market. When they are finally ready to see them, at the weekly brokers’ tour or when they have an opportunity to show them to a customer, those listings are often already under contract.
  • The Better Agent: Energized, mobilized, he/she knows and keeps current with the inventory of active listings, understands market trends and the menu of mortgage options….But most of them are just waiting for the office phone to ring. They rely on what may fall from the sky rather than the business they could generate on their own. They don’t prospect much and they don’t promote themselves in the local media. The result is predictable: they don’t have listings and they have a hard time finding buyers.
  • The Great Agent: They are ready 24/7. When the phone rings, they answer. No time to listen to voicemail. They “own” the market. They know every street and nearly every house within their “farming” area. They know who bought what, when & how. They know the owners’ names and, most of the time, the people behind the names. They are the top guns. They are back. Not that they ever left; they just relish this challenging yet exciting market in the high end.  Who worries about a listings drought and tight credit when you know the people who would agree to sell their luxury property given the right price and the buyers who can pay cash to buy it?

There are only a few superstars in each marketplace, mostly in very affluent towns or districts. They know each other very well and like to work between themselves, in spite of the different company flags.  If a $25 million listing comes on the market, chances are it belongs to one of them, and chances are one of them will sell it. Often those upscale listings never hit the MLS. They sell within the “club”. The top guns know best how to leverage their company’s marketing & technology strengths to complement their own. They are so powerful that you would think they are “making the high end market” instead of merely adapting to it better than others. No, they are just smelling the market before anybody does and pricing properties based on their anticipation of the traditional tango of supply & demand. Want one example? While today most agents are waiting for the Facebook IPO around May to sell real estate to the new millionaires who will be good enough to stop by the office, the top guns have established contact with hundreds of them long ago. There is no substitute for preparation, organization, focus and ambition. That’s life in the fast lane.

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Intero Insider: The Fastest Way to Save $471 a Month Is Right In Your Home

By Gino Blefari | March 7th, 2012 0 Comments

We’ve been in a period of extreme low interest rates for so long now that I begin to wonder whether we’re kind of numb to it. Not long ago, a 5% rate on a long-term mortgage would’ve had many homeowners’ eyes popping out of their heads. But now, even lower rates are commonplace.

It’s baffling to see new data out that shows American homeowners may be missing out on significant savings via a mortgage refinance. An analysis of January 2012 user data by Credit Sesame found that on average, homeowners who would qualify for a refinance based on their credit situations, income and home equity, are overpaying by an average of $471 per month on their home mortgages.

When you average the savings out over 15 years, homeowners could be saving a whopping total of $84,780 per household or in 30 years, the typical length of a loan, save $169,560.

This type of savings seems like a no-brainer, yet Credit Sesame estimates about 14 million homeowners who could qualify for a refinance haven’t done so. Why is that?

Could it be that we collectively really are numb to the fact that interest rates are so low? Are Americans feeling as though rates will be at rock bottom forever? Are they strapped for the cash it takes to close a refinance?

It’s hard to know for sure, but I wanted to bring the issue to light since the savings potentially are so substantial for the average household. I think we may just have a general awareness issue. As such, here are the general things that qualify a homeowner for a refinance and signal that it may be the right financial move to make:

  1. Rate and point drop is high enough to justify it: The general rule is that a refinance is likely worth the time and effort when you can lock in an interest rate that is ½ to 1 full point lower than your existing mortgage, or when mortgage rates drop 2% below your current rate.
  2. Credit history in good standing: You’ll need just as good a credit score to refinance as you did when you first obtained your home loan.
  3. Sufficient home equity: Don’t expect to be able to refinance right out of the gate after buying your home. Lenders will be looking for a healthy amount of equity before they agree to refinance your loan. But figuring out your equity can be tricky in this market – especially if your local market is wildly different than when you first bought (which is likely even if you bought only two years ago). This is a topic all its own, so I suggest reading this thorough article on the subject on Bankrate.
  4. Cash to close the refinance: Yes, refinancing will cost you money to do, which is another reason you’ll want to thoroughly examine the math before jumping into a decision. Sometimes it may not make financial sense. Get an estimate of costs involved from your lender before making any decisions.

Refinancing isn’t always the right decision. But with the prospect of potentially saving $471 a month, it’s well worth considering!

Contact your Western Bancorp representative for refinancing information.

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