The Good, the bad and the ugly about For Sale By Owner

the good the bad and the ugly 300x225 The Good, the bad and the ugly about For Sale By Owner
Good, bad and the ugly of selling your own home

Are you tempted to sell your own Silicon Valley home?  Are you romanced by the savings on commission?

Well, you are not alone since 59% of the Marin County home owners expressed interest in selling their own home.  So, let’s explore the good, bad and ugly about selling your own home.

The Ugly: In 1989 my own broker at the time advised us that we should not list our own home for sale due to the liability associated with the disclosures.    Then he explained why.

See, because you live in your home, you are required to disclose any material defect to the buyers.   What made the matters worse was that we were licensed and the which made the requirements for disclosures much harder.   So, this is the Ugly part of selling your own Silicon Valley home.   You could be inviting litigation by the sheer fact of omitting something as obnoxious as airline noise that could impact your home buyer.   Yes, it might sound strange to you but it’s wiser to disclose every possible problem inside and outside your home to make sure you are not defending your home’s sale transaction up to 5 years after the sale of your home.

The Bad:  Selling your own Silicon Valley home is a full time job.   It requires marketing, advertising, buyer selection, buyer qualification, escrow management, contract knowledge, disclosure development and much much more.   compounding the problem is that this is the largest financial transaction for most people.   So, why would you want to leave it to chance that you might select the wrong buyer who will not be able to close?

The Good:  The average commission savings on a sale of a $1M home is about $80,000.  That’s a lot of money which is tempting for most home sellers.   But can you negotiate your commission down to something less absurd?  The answer is yes.

Contact Us if you have questions about selling your Los Gatos, San Jose, Campbell and Saratoga home.

 

How to minimize your Silicon Valley rental vacancies

Happy Silicon Valley tenants How to minimize your Silicon Valley rental vacancies
Happy Silicon Valley tenants (source: flagship-pm.com)

Do you have rentals in Silicon Valley?  Do you have higher vacancy rates in Winter?

Well, you are no alone.  Winter has the worst vacancy rates, and you lose rental income every month your rental home sits empty.  Having a tenant move-out in close to Winter months is a tough challenge since it’s harder to find tenants.   After all, no one wants to move when it’s nearing holiday season.  ut at this time of year is often considered the kiss

In fact,Kevin Haag,  CEO of Douglas Realty & Development, Inc., encourages his rental property owners to offer an incentive such as  “1st week free rent” if the tenants sign a lease before Christmas.   Other offers could include gift certificates to local restaurants Haag recommends.

You should also compare your rents to similar properties to avoid losing your tenants to other landlords for a few extra dollars.    One option is our Free Rental Survey where we will generate a comprehensive rental survey.    Another option is using sites like Rentometer.  The challenge with Rentometer however is that there is no way to adjust the rental properties for any amenities.

Setting prices for your Silicon Valley renal is part science and part art.  While you need to avoid being over-price, you also don’t want to give an impression that your rents are too low since the potential tenants will assume something is wrong with the property.

Recent studies show that the vast majority of renters rely on the Internet to find rentals. And having a rental property on a landlord’s or property management company’s professional website is one way potential renters can confirm the rental home isn’t part of a rental scam. If you feel ill-equipped to take building a website on yourself, seriously considering hiring someone to help you.

Contact Us if you have any questions.

Time to winterize your Silicon Valley rentals

 Time to winterize your Silicon Valley rentals
Winterize Home (Source NY TImes)

It’s that time of the year again where some proactive planning could save you huge amount of money and damage.  Yes, it’s time to winterize your Silicon Valley rentals.  Some of the most obvious one’s include:

Adding Insulation:  Attic insulation goes a long way to reduce your heating cost on your Silicon Valley rentals.   Ironically having a well insulated attic will reduce your cost of Summer cooling as well.

Clean Gutters:  Clean the gutters to prevent any roof leaks.  If the gutters are not cleaned, they would not drain the water properly.  The gutters then could collapse and crash causing more additional damage to the property.

Chimney Inspection:  Properly maintained chimney could prevent house fires in your Silicon Valley rentals.  Make certain that your chimney is equipped with a spark arrester to prevent sparks from starting fires.

Inspect Carbon Monixide detectors:  California Law requires that each bedroom should be equipped with a Carbon Monixide detectors.  You could face serious liability if your Silicon Valley rentals are not equipped with these detectors.

Space Heater Inspection:   Your Silicon Valley tenants could be using space heaters which are prone to tip and cause fire.   Space heaters also cause electrical shorts which can also cause fires.   You should also update your Residential Lease Agreement  to prevent the use of such heaters.

Contact us if you have questions about winterizing your home.

Shadow inventory of REOs might end up as rental homes

REO Shadow inventory of REOs might end up as rental homes
Bank Owned REO

For the past few years, everyone involved with Bank Owned (REO) properties is aware of shadow inventory.   The rational given for the shadow inventory is that the banks do not want to crash the real estate market and cause a massive jolt to the tepid economic recovery.

But the shadow inventory has not materialized and has given rise to the speculation of allowing inventories of the Federal Housing Administration to be leased to rental conversions.

Federal Reserve Bank of Boston senior economist and policy advisor Paul Willen, have indicated such a plan might not be successful. According to Willen, the number of properties in circulation may essentially be unchanged and the program will not necessarily address the oversupply problem.  This source notes that the Federal Housing Finance Agency is already considering program structures that might be used if the government goes forward with an REO rental conversion plan.

Depending on how the program is structured, some small investors might have an opportuinity to participate.    In our own conversations with Bank of America, they were planning on piloting a program in Arizona to rent some REOs and help home owners avoid immediate foreclosure.    However, we have not heard any updates on this plan in the past 10 months.

The challenge of shadow inventory will remain with the housing market since these solutions are just kicking the can down the road and these homes will eventually become foreclosed.

Contact Us if you are intersted in buying REOs in Silicon Valley.

How to increase your FICO score without any new cards

credit cards How to increase your FICO score without any new cards
Credit Score

Getting the lowest interest rate on your home mortgage translates to thousands of dollars during the life of your loan.   But the 1st step is understanding how the 3 major credit agencies Equifax, Experian and TranUnion determine your FICO score.

Your credit score aka FICO score that most banks utilize, is a combination of scores from 3 credit agencies.  These 3 agencies all collect data on your use of credit and your payment history to assign a score of 500 to 800.   So, let’s assume you know your credit score is low and you want to improve it.  Here are some best practices to increase your FICO score:

Keep your oldest cards:   Your oldest credit card has much more impact on your FICO score than a new credit card that you might have gotten recently even with a higher limit than your old one.   This mean you should not close your older credit cards even if you are NOT using them.  Keep them open, but reduce the limit if you are concerned about theft and un-authorized spending.

Reduce High Balance:  If you owe more than 30% of your limit on a monthly basis, then your FICO score will be poorly impacted.    For example, if you have a card with $10,000 limit and you owe more than $30,00 on it, it might be wiser to transfer some of the balance to another card, to reduce the impact on your FICO score.  This will improve your FICO score.

Pay On time:  Make your monthly payments on time and avoid missing them since this impact your FICO negatively.   In fact, it’s wiser  to pay the minimum payment if you are NOT able to pay your card’s balance every month.

Avoid Bankrupcy:   If you are considering bankruptcy, you need to think long and hard since these filings will impact your credit score for a long time.   So, consult an attorney to explore all your options before filing for bankruptcy.

Avoid Foreclosure:  The impact foreclosure is also sever on your FICO score.   This signals the lenders that you don’t take your obligations seriously since you have options to do a Short Sale and get ride of the mortgage debt much more elegantly.  In fact, Short Sale will impact your credit score much less than a foreclosure.

 Call us if you have any questions about your credit score.

 

Tell tell signs that your Saratoga FSBO is overpriced

FSBO Tell tell signs that your Saratoga FSBO is overpriced
For Sale By Owner

It’s clear that the bloom is off the California Real Estate rose specially since August 2014, homes sales have declined by 13.5%.   And perhaps that’s why your Saratoga FSBO is not selling as quickly as you might have expected.

The sales data indicates that the number of homes sold in August 2014 declined to 34,269 homes.  We are already seeing signs of slow down in sales in Saratoga, Los Gatos, Campbell, and San Jose on hope that are staying on the market much longer than the heady days of Spring.

So if your Saratoga FSBO home is not selling, you need to re-consider your pricing strategy.  Using the the most recent sales within 1 mile radius of your home that closed in the last 30 days.  Using comps that are older than 30 days will result in might higher sale prices which is not an accurate reflection of the current market.

Also, make certain the Sold Comps you utlize are within 300 square feet in size.  Finally, the age difference between your home and these sold comps should not be more than 5 years.

But even if you commit to all this work, these comps have to be adjusted for :

  • Size
  • Age
  • Lot Size
  • Amenities

In fact, the most reliable way to find your home’s value it to work with a local Realtor who can develop Competitive Market Analysis (CMA) on your home.  Your CMA will include qualified sold comps.  But the neat part of CMA is that the sold prices can be adjusted for

You could use sites like Zillow, Trulia or Redfin to find sold homes in your zip code.  But these sites will not allow you to adjust the prices as you could do with a CMA..

Contact Us if you need help with a CMA.

Alternatives to eviction for your Silicon Valley rentals

Eviction Alternatives to eviction for your Silicon Valley rentals
Tenant Evictions

Do you have problem tenants ?   Are you considering evictions? Well, there might be simpler alternatives to eviction that are quicker and simpler.

In fact, a letter from an attorney describing the problem and the landlord’s legal remedies, is often all the encouragement a tenant needs to get back into compliance.

Another alternative to eviction is to attempt cash-for-keys where you develop an agreement with the tenant to leave if you offer them cash compensation.  Granted paying a problem tenant to leave is a tough pill to swallow, but many landlords find this solution to be the simplest and the most cost effective.

After all just imagine a costly and lengthy court case where you are not only losing rent, but also incurring court costs.  In fact, some tenant remain in their rental contracts because they can not afford to move.  So, if you offer to cover moving expenses, a tenant might take you up on the offer. Make sure you get the agreement in writing. Also, require a walk-through before any money is exchanged.

If a tenant has lost a job, or their hours have been cut back, moving to a cheaper unit might also solve the problem. Most tenants would be relieved to hear that their landlord is willing to work with them to find alternatives.

Contact us if you have question about developing a cash-for-key-contracts for tenant evictions.   We are property management services in San Jose, Campbell, Los Gatos and Saratoga.

Evict or Not Evict: What is the point of no return?

Eviction Evict or Not Evict:  What is the point of no return?
Tenant Evictions

Do you have problem tenants in your Silicon Valley rentals?  Are you finding new surprises every month?

Well, you are not alone.  No matter how carefully you conduct tenant screening there are some tenants which won’t be a good fit which can leave to evictions. But  evictions are never simple or fast.  If you don’t currently have a professional property manager, there are some important things to consider before throwing your tenants’ furniture to the curb. But 1st things 1st.  Let’s examine the grounds you might have for evictions.
Uncooperative Tenants:  Failure to pay rent is the most common reasons for eviction.   Most  States including California have detailed protocols for evictions which landlords must follow.  In most states, you must give tenants “Notice to Pay Rent or Vacate.” If the tenant fails to pay rent during a legally determined time period, then a landlord must file an “Unlawful Detainer” action. The tenant has the option of fighting this action.  But if the tenant doesn’t defend against this action or fails to appear a default judgment would be granted. If the tenant fights the action, a hearing is held to review both sides of the dispute.

If a judgment is eventually granted against the tenant, and the tenant still refuses to move out, the court will issue a “writ of restitution” which the local Sheriff will post to the tenant’s front door. If the tenant hasn’t moved out by the time specified in the writ (normally three days), the landlord is free to take possession of the rental and remove the tenant’s property.  However, California laws require landlords to store the personal belongings of their tenants for at least 30 days to allow them time to collect them.  cal laws may require that this be done under the supervision of a sheriff.

Lease Term Violations:  Tenants often violate terms of their lease by keeping pets or sub-leasing the property without the written notification to landlord.  They my cause a nuisance, damaging your property, violating the rights of the neighbors or the rules of your lease in some serious way.  Similar to eviction for failure to pay rent, you may end up having to go to court and get the sheriff involved.

What Not to Do: As a landlord it’s not wise to take matters into your own hands and retaliate.  You could easily find yourself being sued or even facing criminal charges. Some examples of unlawful retaliation are:

  • Turning off Utilities including water, heat, or electricity
  • Threatening or assaulting a tenant
  • Changing the locks
  • Removing tenant property

The most important thing to remember when faced with having to evict a tenant is to keep cool and act in accordance with the law. It’s always a good idea — if not the best idea — to consult a real estate attorney, particularly if you don’t have a licensed property manager.

 Contact us if you need to discuss your option with difficult tenants in your Los Gatos, Saratoga, San Jose or Campbell rentals.

Top 4 benefits of getting a loan to buy your Solar panels

SolarCity Top 4 benefits of getting a loan to buy your Solar panels
Solar City

San Mateo based Solar City has announced a loan program to offer consumers the opportunity to buy their solar panels instead of just leasing them from the company.  So, we took a close look at the program and here are the Top 4 benefits of using a loan to buy Solar panels:

No Upfront Cost:  Using a loan to buy your Solar panels means that the you will not have to pay $9,000 to $15,000 for purchase and installation of the Solar panels.   The just have to make payments on the loan which is secured by the property.

Tax Credit goes to consumer:  With the lease option, the Federal Tax credit for Solar panel installation was going to installer or the Solar companies.  With the purchase option, this tax credit goes directly to the consumer who can use it to pay down the loan.

 Loan Terms: Solar City loans offers as 30 year loans with 4.5% interest rate which are not that high considering that they will recorded as 2nd liens.  But customers do not pay a fixed amount every month. In fact, the you will pay only for the power the your roof panels produce. If the panels produce a lot of energy the loan can be eliminated sooner than the 30 year terms.

Simple Terms:  Purchasing your Solar panels with a loan is a much simpler contract for most consumers to understand.  In fact, they are already used to gettig these kind of loans for buying a car or a large home appliance.  

So, the question to ponder now is whether you want to own your Solar panels or just lease them.   The question which remains unanswered is that how effective these panels will be after 20 or 30 years on your roof.   Will they still produce enough power so you don’t have an electric bill?    In our own investigation for our Los Gatos home we determined that spending close to $15,000 to eliminate a $110 per month of electric bill was not justifiable.

What do you think?  Contact Us if your conclusions were different than ours about installing Solar panel in Los Gatos.

How to avoid failure with your Silicon Valley FSBO sale

FBSO1 300x207 How to avoid failure with your Silicon Valley FSBO sale
For Sale By Owner (Source; theprovince.com)

Are you interested in saving commission on your Silicon Valley home sale?   Are you internet savvy?   Well, you are not alone.

A March 2014 Survey for Marin County showed 59% of home owners interested in selling their own home.  But what kind of tools and services will you need to avoid failure in your fsbo sale?

One option for home owner interested in selling their own home is fsbo.com. But this website site was showing only 55 homes for sale in the entire state of California which doesn’t imply a thriving business.   One of the reasons could be that fsbo.com owners have no clue about marketing their services to home owners.  This site offers a flat fee MLS listing for $349.95 dollars which is far from typical $80,000 commission that you would pay on a  $1M Silicon Valley home.   This listing service include:

  • MLS & Realtor.com Listing for 6 Months
  • 10 photos on MLS
  • FSBO.com Listing with unlimited photos.
  • Personal ID Number

The site also offers Yard Signs and lockbox for home owners who want these options for a fee.

These are good offerings, but the fact remains that listing your home in MLS doesn’t solve the problem of pricing, Unqualified Buyers, Marketing Challenge, Disclosures that are at the heart of any successful real estate transaction.    

Contact Us if you would like to discuss your Silicon Valley home sale.