CJ's Blog

How does non-permitted work impact the buying or selling of a home?

CJ Brasiel (Fireside Realty DRE 01509579) — Fri, 04 Dec 2009 09:40:02 -0600

Before we can discuss the impact non-permitted work has on a home, it is important to talk about what a permit is and why it is required for work completed on a home. Permits are typically issued in accordance with a city or county ordinance. Therefore, not obtaining permits for required items is unlawful. Permits are the simplest way for a governing body to manage the construction practices of a community for the general welfare of the residents. From the ground up, local inspectors confirm that construction is being completed in a manner that meets building code standards. These standards were created to insure the building is structurally sound and safe.

If you are using a contractor, they will be able to identify what work requires a permit. In Santa Clara County, any work totaling over $500 requires a licensed contractor. A non-licensed contractor may not know the building codes and may not be aware of permits required. A great site for finding information about a contractor is the Better Business Bureau. You can also try The Prime Buyer's Report for reviews and ratings of local contractors.

Directly from the Santa Clara County web site:

When Is A Building Permit Required?
A building permit must be obtained before you erect, construct, enlarge, alter, move, repair, improve, convert, or demolish any building or structure. This includes decks over 30 inches high, patio covers, sheds over 120 square feet, fences over 6 ft. high, and retaining walls more than 4 ft. in height, measured from the bottom of the footing to the top of the wall. Fees are calculated based on the size, type and valuation of construction. Typical codes that apply: Uniform Building Code, Uniform Mechanical Code, Uniform Plumbing Code, National Electrical Code, and State building codes. For single-family dwelling, a good reference is "Dwelling Construction Under The Uniform Building Code"; also check your public library.

Many cities and counties have on-line permit search capabilities. For San Jose, simply go to San Jose Online Permits and enter the parcel number of the property to find what permits are associated with the property. Certain permits may not be available on line and you can go directly to the planning board in the city hall complex and request a printed copy. The planning department can also answer questions you might have about a specific permit. Recognize that the permit records are not perfect and there have been incidences where the only record of the permit is the copy that the owner or contractor very wisely kept. Also note that certain changes to a home may have been completed prior to a building code requirement and may have been grandfathered into the system. This is typically recognized when the tax records state additional square footage, rooms, or bathrooms as a part of the tax records but no permits are recorded.

If you are a seller of a home and you are aware of non-permitted work on your home you must disclose this information to the buyer via the Transfer Disclosure Statement (TDS) form. Certain sellers do not have to complete a TDS. The TDS makes the assumption you have lived in the home and have intimate knowledge of the dwelling. Therefore, foreclosures (REOs), trustee sales (including probate sales) do not require a TDS. In these cases, a buyer must be even more diligent in their investigations of the property.

As a buyer, the investigation of permitted work is a key part of the purchase for several reasons. Non-permitted work can impact the value of the home. The appraiser measures the square footage and compares to the tax records. The converted garage is an obvious flag for an appraiser. Realize that some garage conversions were allowed and permitted previously in the county. Any permits should be provided to the appraiser. The lender may challenge non-permitted work and require a remedy to the non-permitted addition. The underwriter can ask to see final permits and/or require the property be returned to its "original state". If you are a buyer, this may be the moment you decide to walk away. Be sure to understand contingency periods during the investigation of the property, appraisal period, and underwriter loan approval in order to protect your deposit. This is particularly important when purchasing from a non-owner occupant (i.e. REO, foreclosures, trustee, probate).

Recognize as a buyer or seller, bringing the non-permitted change to permitted status there may be at significant cost. For the seller, there may be fines. The inspector can not see electric work through the walls and destruction of the drywall in order to evaluate the electrical work may be required for inspector approval. Foundations and plumbing can also require significant destruction for adequate exposure. Worse case scenario, the inspector is called out and determines the structure, remodel, etc. must be completely removed and the property returned to its original state. Yikes.

Because permits are a reflection of building codes which are meant to insure safety and general welfare of a community, insurance companies do not smile favorably on claims created by non-permitted work. Electrical fires and flooding due to non-permitted work can result in a denied claim. Earthquake insurance claims can be denied if non-permitted additions are determined to be cause of structural issues. Another reason to keep personal copies of all permits and contractors licenses in a safe deposit box or durable personal safe.

Non-permitted work on a home creates challenges on both the selling and buying sides. The reality is that as a REALTOR®, I deal with this challenge more times than I care to admit. In many cases, the issue can be resolved with the least amount of pain and stress. Trips to the planning department (bring lots of quarters for parking) can be a daily adventure. Having licensed contractors available to provide evaluations on remedies and estimates for those remedies helps sellers and buyers determine the impact. The unfortunate results can be a very large difference in opinion about the value of the home due to non-permitted work. It is a sad conclusion when a home that could have sold for $650,000 limits the buyers willing to buy due to the fact the seller failed to obtain a $5000 permit.

Before you decide to complete work on your home or before you decide to purchase a home that has non-permitted work, determine the effect on value. Do your homework about permits and work with licensed contractors and a REALTOR® when trying to determine the challenges and value provided by any additions or remodeling associated with the home. Whether seller or buyer, ask lots of questions before making a decision about the impact of non-permitted work.

Does it come with the house? How to decide.

CJ Brasiel (Fireside Realty DRE 01509579) — Sun, 29 Nov 2009 12:33:33 -0600

As buyers walk through a home it is not uncommon that they fall in love with a certain room or aspect of the home. Maybe it is the dining room and the beautiful chandelier. Maybe it is the basketball hoop in driveway. Maybe it is the six-burner professional grade gas stove in the kitchen. Whatever the item is, it is important for both seller and buyer to decide what is and what is not included in the sale of the home.

The basic real estate rule is when something is "attached" to the home, it comes as a part of the purchase. This includes light fixtures, ceiling fans, window coverings and built in items. It makes sense that after purchasing a home you should not walk into a "stripped" home.

However, it could be that the chandelier the buyer fell in love with is a family heirloom of the seller's. Maybe it is an antique worth hundreds of thousands of dollars. This can cause challenges if not handled properly. The seller should be clear with the listing agent regarding any fixtures that are not intended to stay with the home. The listing agreement and the purchase contract includes specific line items for "items included" and "items excluded".

For an item like a family heirloom it might be best to replace the chandelier with a different light fixture prior to the home going on the market. At minimum the listing agent should state the intentions of the seller to not include the chandelier in the sale and a note placed in the home indicating the same intention. This can be more difficult as there must be an agreement between the buyer and seller on what will be an "adequate" replacement of "equal" value.

The basketball hoop if attached to the roof or embedded in concrete is also considered part of the home. Again, if removing the basketball hoop creates an eyesore on the home the buyer can insist that the concrete or roof trim be repaired and/or the basketball hoop returned to its original condition. These types of items can be very troublesome and it is the best to remove any fixtures that are not staying with the home prior to advertising the home for sale.

Appliances do not necessarily come with the home. Typically, if the appliance is included in the sale it is indicated on the multiple listing print out. If removing the appliance will cause damage, proper repairs must be completed to the buyer's satisfaction prior to the close of sale. If an appliance, such as a home entertainment system, is an integrated part of the home or built in in such a way that replacement would be difficult, all parties must agree to the remedy.

Sellers should take extra care to think about what will be a part of the sale and what is up for negotiation. Buyers should be aware of what items are attached and what items are important to their decision to purchase a specific home. Intentions and assumptions are key communication points. This is one of those times when the concept of "make no assumptions" and "everything is negotiable" is particularly important to insuring a smooth deal.

(CJ Brasiel is a Broker Associate with Fireside Realty located in the great neighborhood of Willow Glen in San Jose. Committed to exceeding clients' expectations through market knowledge, strong negotiation skills, prompt communication, and a passion for making each transaction a win-win. Read testimonials at http://www.CJBRealEstate.com)

How's the Housing Market in Willow Glen - San Jose, California?

CJ Brasiel (Fireside Realty DRE 01509579) — Sat, 17 Oct 2009 13:51:05 -0500

I adore the neighborhood of Willow Glen in San Jose. I remember when I first moved to San Jose I lived in Cambrian Park (another great neighborhood) and would come to Willow Glen each holiday season to admire the Christmas Trees that the residents would place in their front yards. Yes, Christmas trees completely decorated with lights, ornaments, and a tree topper; a sort of neighborhood "festival of lights". To walk up and down the brightly lit holiday streets and then have a cup of cocoa at one of the coffee shops in downtown Willow Glen remains one of my family's favorite traditions.

Willow Glen offers that community that so many of us are looking for. Diverse architecture, diverse population, kid-friendly, dog-friendly, and active. There is always something going on. The annual festivals throughout the summer and fall months keep us all full of kettle corn and live music. The parks are great social gatherings for sporting events, birthday parties, and plain 'ole family fun. We can walk our streets and wave hello over and over to our extended neighbors.

I am a little biased. Five years ago, I was able to make one of my dreams come true by moving into this great neighborhood called Willow Glen. Yes, I bought at or close to the peak of the market. But I have been very pleasantly surprised at how well our little corner of Willow Glen has weathered the financial storm. I thought it would be interesting to take a look at where we were and where we are in regards to the housing market of Willow Glen.

Below is a graph that outlines the boom and bust time specific to Willow Glen. If you look at the average sales price for a home in September 2009, you will see we have dropped back to 2004 prices. When I have run these stats for Alum Rock, they dropped back to 2002. Some parts of South Santa Clara County dropped to 1998 prices. There is something to be said about stable neighborhoods. (These averages are for single family detached homes. Reflective of the majority of homes in Willow Glen.)

In this next graph you can see the market barometer that indicates whether or not the Willow Glen area is in a buyer's market or seller's market. Currently, there is only about four months of inventory on hand which would lean toward a seller's market. The challenge that you can't see in these graphs for Willow Glen is the number of higher priced homes for sale.

Looking at the price range of a neighborhood also indicates the local market. A buyer requiring a loan for $729,000 or above is paying close to 2% higher to borrow money than someone who's loan amount is under $729,000. Even better if the loan amount is $417,000 or below. Therefore, you can look at the market in how a buyer affords a home. If the home is under $300,000, many buyers are investors with all cash. Between $300,000 and $500,000 a mix of first time buyers and investors. Many of these loans are FHA loans requiring a minimum of 3.5% down payment.

The $600,000-$800,000 are typically two-income buyers with at least 20% down ($120,000-$160,000). Above $900,000 the buyer either is a "move-up" buyer utilizing equity of a home they sold to buyer a bigger/better home or a home in a better neighborhood or a buyer with the means to support a 25-30% down payment and mortgage payments of $5,000/month or more. These are broad generalizations but it helps to identify the type of buyer and therefore the activity you might see in a neighborhood. Depending on the availability of "jumbo loans" (>$729,000) and their associated interest rates high-end homes may see substantial price pressure in the coming months on these upper level homes in Willow Glen.

Finally, the infamous "straw" for any neighborhood value lies in how many distressed homes are in the make up of total homes for sale. Willow Glen has averaged around 20% of its active inventory in distressed homes over the last two years. If we look at the number of sold homes over the last year in Willow Glen, a total of 37% were distressed. Distressed is broken down into short sales and foreclosures. Compared to other neighborhoods Willow Glen has been on the light end of the foreclosure stick. East San Jose has seen nearly 60% of the homes for sale to be distressed. However, we may see foreclosures increase slightly in 2010 due to unemployment and adjustable rate loans due to adjust this coming year.

Overall, Willow Glen has managed the economic storm quite well considering the challenges facing each home owner. It is interesting to think maybe, just maybe, what makes a neighborhood stable is the community that lives there. Good, stable incomes lead to a reduction in the "struggle factor" related to raising families and the ability to place food on the table and a roof over heads. There is an social economic wake up call that has come out of these last two years. For those just barely "hanging in there" we have to recognize the American Dream remains a difficult dream to make come true. We must continue to find ways to help families not only obtain the American Dream but also help them keep it. In the meantime, another holiday season is approaching and I know the streets of Willow Glen will make me smile once again. Cocoa anyone?

14906 Conway Avenue San Jose, CA 95124

CJ Brasiel (Fireside Realty DRE 01509579) — Sat, 17 Oct 2009 13:48:04 -0500

6 Bedrooms - 3.5 baths - Bonus Cottage with full bath!

This is the home you have been looking for! Nestled in the great community of Cambrian Park with Union schools, this home will be exactly what your family needs. So many great features: beautifully remodeled kitchen, updated baths, large family room, formal living and dining room, six bedrooms,2.5 baths, and a bonus cottage with a third full bath. The home is light and bright with 2,274 square feet.

This large, 9,625 square foot lot has been designed well for family fun. The play set and patios will let you enjoy the many great evenings at home. Not only does this home offer the right updates with copper plumbing, dual pane windows, crown molding, and finished garage but also the charm of hardwood floors, mature landscaping, and a white picket fence. With just the right floor plan for entertaining, overnight guest, or kid sleep overs, this home will provide all the space you need on just one floor. Make an appointment to see this home soon!

See more at 14906 Conway

Cambrian Park Home for Sale - Large Lot Union Schools - A must see!

CJ Brasiel (Fireside Realty DRE 01509579) — Sat, 17 Oct 2009 13:42:46 -0500

Cambrian Park Home For Sale

Overview
Maps
Photos
Description
Neighborhood
IDX Search

$978,000

Single Family Home
For Sale

Main Features

6 Bedrooms
3 Bathrooms
1 Partial Bathroom
Interior: 2274 sqft
Lot: 9,625 sqft

Location

14906 Conway Avenue
San Jose, CA

CJ Brasiel Broker Associate, SRES, GREEN

Fireside Reatly
(408) 406-6035
CJ@CJBRealEstate.com
http://www.CJBRealEstate.com

Listed by: CJ Brasiel Fireside Realty

Our recent listings

Remodeled Home in San Jose - Perfect for Entertaining!
Cambrian Park Home For Sale
Very clean, well maintained, ready to move in!
Extra Large Lot R-2, 4BR/2BA, Downtown San Jose

Subscribe to our listing feed

See more San Jose, CA real estate for sale

New listing East San Jose - Perfect for Entertaining!

CJ Brasiel (Fireside Realty DRE 01509579) — Sat, 17 Oct 2009 13:40:47 -0500

Remodeled Home in San Jose - Perfect for Entertaining!

Overview
Maps
Photos
Description
Market Stats
IDX Search

$618,000

Single Family Home
For Sale

Main Features

3 Bedrooms
2 Bathrooms
1 Unit
Interior: 2300 sqft
Lot: 11,934 sqft

Location

14100 Buckner Drive
San Jose, CA 95127

CJ Brasiel Broker Associate, SRES, GREEN

Fireside Reatly
(408) 406-6035
CJ@CJBRealEstate.com
http://www.CJBRealEstate.com

Listed by: CJ Brasiel

Our recent listings

Remodeled Home in San Jose - Perfect for Entertaining!
Cambrian Park Home For Sale
Very clean, well maintained, ready to move in!
Extra Large Lot R-2, 4BR/2BA, Downtown San Jose

Subscribe to our listing feed

See more San Jose, CA real estate for sale

14100 Buckner Drive San Jose, CA 95127

CJ Brasiel (Fireside Realty DRE 01509579) — Sat, 17 Oct 2009 13:31:16 -0500

3 Bedrooms 2 baths - Bonus - completed basement.

Beautiful East Side home that has large unincorporated county lot. Complete remodel inside with updated, granite kitchen, new cabinets, tile flooring, inset lighting, professional gas stove, and breakfast bar. Updated baths. Crown molding and inset lighting add the right touch of elegance. Distressed wood flooring through out the main house and new wall-to-wall carpet in the bedrooms. Partial basement has been finished and can be used as large recreation room, den, or guest room. Lovely and well maintained in ground pool with hot tub surrounded by mature landscaping. Extra covered patio area perfect for the outdoor grill and kitchen. Exterior is stucco with dual-paned windows, new gutters, and fresh paint. The roof is tile. There is a two car attached garage and central air conditioning. So many great features, you must add this home to your list to see.

See more at 14100 Buckner Drive

Defining "AS-IS" when Buying or Selling a Home

CJ Brasiel (Fireside Realty DRE 01509579) — Sun, 02 Aug 2009 13:05:18 -0500

The "AS-IS" title has a different meanings to different people. When I speak with buyers and sellers about selling or purchasing a home, they rarely have the same definition of what "AS-IS" means. If you speak with a seller they might believe that by having their real estate agent advertise the home "AS-IS" on the local multiple listing service (MLS), it will prevent them from completing any repairs that the buyer might request. Sellers can also believe the "AS-IS" statement protects them from legal charges down the road. If you speak with the buyer they might believe the "AS-IS" really means there is something terribly wrong with the home or more specifically, what is on the MLS is not exactly the true picture of the home itself. Let's break this down from both perspectives.

For the Seller:

First and foremost, as a seller you are never protected from legal actions because of an "AS-IS" statement. You are best protected by disclosing all known issues with the home. If you know about it, disclose it. If you suspect something is wrong, not working, might be, could be not quite right; disclose it. If you think there might be a plumbing leak but think that if you don't look for it, you don't have to disclose it, an you are covered. You are not. However, if you had no clue, no reason to suspect, no one ever told you, that the foundation had a crack; you are not responsible for disclosing the fact you didn't know. If you are not clear on what to disclose, here is a simple rule; If you know of anything that might affect the value of the home in a buyer's eye - disclose it.

If you have lived by the railroad tracks 40 years and you fall asleep every night to the sound of the choo-choo running down the tracks, you should disclose that there is a rail road track near your home. Don't wait until you are in the court room to state, "But your Honor, it never bothered me." Even with incredible tools like Google Earth, the seller is responsible for telling the buyer everything that is known about the home and neighborhood.

One piece of advice to sellers. Forget "AS-IS". In my opinion advertising "AS-IS" raises questions that don't need to be raised about the home's condition. When a buyer comes to buy your home they see the home "AS-IS". They are buying it "in current condition". The seller does not need to explain why the house is 40 years old, it simply is 40 years old. The advertising "AS-IS" sets up more challenges then it is worth. Leave opportunity for negotiation on everything. If it is a simple plumbing leak, why wouldn't you want to fix it to sell your home? If it is a foundation crack with a $40,000 price tag to fix, why should a buyer simply accept it without seeing a credit for repair or discount in price to reflect the true value of a home with foundation issues? The best way to negotiate any deal to the best interest of all parties is to slip on the other side's moccasins. Remember, a key component of any contract is a meeting of the minds between parties.

The next piece of advice to sellers is to complete inspections prior to marketing your home. Knowing what needs to be fixed and fixing it almost always cost less then when the buyer finds it through inspections. Negotiating repairs in the middle of the contract almost always cost more because of the emotions involved. Always complete repairs with an appropriate professional. Your local code may require licensed contractor for repairs over a certain dollar amount. Make sure the receipt details the work completed and ask for a transferable warranty.

For the Buyer:

Fair market value is in the eye of the buyer. The buyer should be aware that signing an "AS-IS" addendum may be a good trick to get an offer accepted to the unknowing seller but in the end, the buyer has the right to negotiate anything discovered during the contingency period. If you write an "AS-IS" addendum, expect an agitated seller when you ask for repairs. It is much more difficult to negotiate with someone who thinks you pulled a fast one on them with an "AS-IS" addendum. If the buyer makes an offer on the house based on an hour walk through, then completes inspections and finds items that were not known to the seller but affect the value of the offer they presented, they should attempt to negotiate repairs, accept the home without repairs, or cancel the contract.

On the other hand, if as a buyer you receive all the inspections and disclosures from the seller before you make the offer and then later ask for repairs of known/disclosed items, it is a tough negotiation. The buyer has the absolute right to ask for anything during the contingency period, but your chances of getting your wish may be limited by your knowledge at the time of writing the offer. It is always best if you can review disclosures and or inspections prior to writing an offer. It is better for everyone involved when a buyer is able to make an informed offer to purchase. Before writing an offer to purchase a home ask your agent for comparable properties sold in the last three months and if there are any inspections or disclosures available to review. If you can, see all the homes that agent provides to you as comparables.

In summary, the "AS-IS" discussion is kind of moot. It does not prevent a buyer from asking for repairs or re-negotiating price. It does not limit the buyer in completing all investigations of the home during allotted contingency time. It does not remove the responsibility nor protect the seller from legal action regarding the disclosing of known defects. It does not mean something is wrong with the home. It does not mean nothing is wrong with the home. It is an intention. It is an intention for the seller to say to the buyer, "Don't ask for the moon because I won't be able to give it to you" and the buyer to say to the seller "OK, I won't ask now, but maybe later I will ask for the moon". Both are silly as you don't need a stated intention to realize, this is a negotiation. Beginning to end.

260 Lake Avenue #8 Santa Cruz, CA 95062

CJ Brasiel (Fireside Realty DRE 01509579) — Fri, 03 Jul 2009 14:00:28 -0500

Santa Cruz Yacht Harbor Condo - Beach Fun For Sale

$850,000

Location:
260 Lake Avenue
#8
Santa Cruz, CA 95062

Map and Directions

Condominium

2 Bedrooms

2 Bathrooms

Interior: 850 sqft

Lot: 871 sqft

Description

Incredible Opportunity to have a beach place and a great vacation rental! Harbor views, and less than a block from the great beach at Santa Cruz Yacht Harbor. Enjoy the views from your private deck. Enjoy summer meals after the beach in your completely remodeled kitchen. Take time to relax in this great home. HOA $265

Photos

Neighborhood Info

http://www.santacruzharbor.org/

http://www.virtualparks.org/scenes/ZOgs9oXeTnPSOofj0td4wag.html

Listed by

CJ Brasiel Realtor, SRES

Phone: (408) 406-6035

Listing agent/broker: CJ Brasiel

14111 Buckner Drive San Jose, CA 95127

CJ Brasiel (Fireside Realty DRE 01509579) — Fri, 03 Jul 2009 13:52:59 -0500

Large Lot, Well Maintained, Clean, Ready to Move In -Alum Rock

$518,000

Location:
14111 Buckner Drive
San Jose, CA 95127

Map and Directions

Single Family Home

3 Bedrooms

2 Bathrooms

1 Partial Bathroom

Interior: 2109 sqft

Lot: 14,000 sqft

Description

Welcome Home!

If you are looking for the perfect space to call home,
look no further. This wonderful ranch home is located
on nearly a 1/3 of an acre lot and has a little over 2000
square feet to spread out in.

The home boasts 3 bedrooms and 3 baths with an extra
detached room addition that can be used as an office
or game room, or...you decide.

The interior has hardwood floors, scultped celiings and
lots of character. The floor plan is open and offers lots
of natural light from the large picture windows.

The yard is an incedibly well planned oasis with many
fruit and flowering trees. Intelligent watering system
that provides water based on the needs of the plants.

The position of the home on the lot along with the
manicured Oleanders and Evergreens allow for perfect
privacy. This home spells retreat in so many ways.

Take a seat on the back patio and relax for awhile.
This is a wonderful home, ready for you.

Photos - See more at http://www.14111Buckner.com

Listed by

CJ Brasiel Realtor, SRES

Phone: (408) 406-6035

Listing agent/broker: CJ Brasiel Fireside Realty

2475 Sunflower Circle Gilroy, CA 95020

CJ Brasiel (Fireside Realty DRE 01509579) — Fri, 03 Jul 2009 13:49:47 -0500

Custom Home with Views Galore!

$950,000

Location:
2475 Sunflower Circle
Gilroy, CA 95020

Map and Directions

Single Family Home

4 Bedrooms

3 Bathrooms

Interior: 3178 sqft

Lot: 17,424 sqft

Description

Wonderful home with views galore. This is a retreat from the fast paced silicon valley life. Views of the mountains/valley. Large open floor plan with gourmet kitchen, separate dining/family/den, high ceilings, lots of natural light. Formal entry. Incredible yard/pool/gazebo/landscaping. It is easy for your family to feel right at home. This is a must see. Best value in neighborhood.

Photos - See more at http://www.2475SunflowerCircle.com

Listed by

CJ Brasiel Realtor, SRES

Phone: (408) 406-6035

Listing agent/broker: CJ Brasiel Fireside Realty

Alum Rock San Jose - Housing Market at the Bottom?

CJ Brasiel (Fireside Realty DRE 01509579) — Tue, 31 Mar 2009 13:36:46 -0500

In the last couple of weeks, I have heard more and more real estate agents and loan officers tell me that they believe we might be near the bottom of the housing market in San Jose. Their biggest support for this theory is kind of interesting. It goes like this: " How much lower can home prices possibly go?" Hmm. Well there you are. Scientific, (not), analytical (not), a hypothetical guess (barely), coming right from the professionals.

I decided to look at the stats to see if I could see any indication that we are near the bottom of the housing market in San Jose. I looked at the average sales price for each neighborhood for single family homes, condominiums, and town homes from February 2008 to February 2009. Out of the 15 neighborhoods, 7 were continuing to trend down on average sales price. Saratoga had a huge down in January and then a huge up in February so I will call that a wash. Four areas, Milpitas, Central San Jose, Cambrian, and Willow Glen showed an average sales price slightly higher in February 2009. Certainly hard to call one month's results a trend in this market. Especially, when over the last year we have seen some bump ups in almost all the neighborhoods at one time or another.

The most interesting graph came from the Alum Rock neighborhood. Alum Rock has been hit hard as a result of sub-prime lending. Alum Rock was one of the last areas to "boom" in San Jose. It was also one of the first to show signs of trouble. Over and over again, I see the "entry" level markets hit hardest by the sub-prime debacle. There were not a lot of sub prime loans made in Atherton. You see the results of sub-prime lending where minorities, blue collar workers, double and triple job Mom and Dads, with extended families wanted a part of the American Dream. But I digress.

Alum Rock has been fairly in regards to average sales price for the last 4 months. Number of listings on the market coming down and new listings are down as well. With 4 months of steady numbers, you might very well be able to call this a trend.

Once again, Alum Rock calls out to anyone looking for an opportunity. If you are a first time buyer, Alum Rock offers single family detached home with a yard for under $300,000. The Alum Rock neighborhood makes up about 17% of total active homes for sale in San Jose. Alum Rock has 570 current listings with about half of those listings as short sales and about a third REOs (foreclosed, bank-owned, corporate-owned). Another interesting stat that simply screams "affordability" is the break down in pricing of the active listings. See the graph below.

Nearly 300 homes under the sales price of $300,000. That hasn't been seen in San Jose since the year 2000. Wow. Nine years of appreciation gone. Which now, you can go back to the original view point of some of my colleagues and ask, "How much lower can home prices possibly go?" It is a question to ponder.

With nearly 50% of the listings short sales, you have to wonder how many of those loans will be modified in the next couple of months. If loan modification works, we could see a continued reduction in inventory and therefore the potential for more stabilized pricing. On the other hand, if loan modifications do not work and/or the lifting of the moratorium on foreclosures (due to expire April 1st for the big banks) sends a flood of REOs to the market, we could potentially see another drop in average sales price. How much? The Alum Rock neighborhood of San Jose has lost 50% of value since the peak of the market in 2007. Can it lose 60%? 70%? 80%? At some point you have to ask how much is the land worth?

Has Alum Rock reached the bottom of the housing market? Does seeing a upshot in average sales price for Willow, Cambrian, Cental San Jose, and Milpitas indicate other neighborhoods may be approaching the bottom? Will interest rates increase and trump any 5-10% drop in sales price over the next quarter? Will Richard Branson be the first person to truly master space travel for the average citizen? Who knows. But I believe if you are a fence sitter, it is time to get uncomfortable enough to jump down and start looking. The pundits are correct about one thing; hind sight is 20/20.

Deed of Trust, Note, Mortgage: What are all these papers I'm signing?

CJ Brasiel (Fireside Realty DRE 01509579) — Wed, 25 Mar 2009 12:20:22 -0500

Buyer's look forward to closing escrow (COE), because they have been told that after escrow closes they will receive the keys to their new home. Signing documents regarding the purchase of a home can be a little overwhelming for some and for others a white and black blur. For many clients simply signing their legal name after years and years of signing their "preferred" name is enough of a challenge, let alone reading and understanding all that they sign. With that in mind, I wanted to take a moment to explain some of the documents involved in the purchase of real estate.

The Escrow Officer's Role.
Simply put, this is a third party that insures that the contractual obligations of the buyer and seller are documented as satisfied. They provide a neutral environment to sign documents and insure that the monies are dispersed according to the contractual directions. Many times, escrow agents are employees of a title company. In Santa Clara County, commonly the seller or listing agent chooses the escrow and/or title company that will be used for the transaction. However, it is actually the right of the buyer to designate. If you have a preference, please make sure you discuss it with your agent at the time you create the purchase contract.

The difference between a mortgage and a deed of trust.
In California, the deed of trust is utilized as a security device for real property. It is held by a third party (many times a title company- called the trustee) and has two simple functions. The first responsibility of the trustee in regards to the deed of trust is the reconveyance of the deed (ownership) from the trustee to the borrower once the note is paid off. The second job of the trustee is in regards to the foreclosure process if the borrower fails to pay. In essence, the trustee insures the contractual agreements between the beneficiary (lender) and the trustor (the borrower) are satisfied.

The mortgage as the security device.
There is no third party in the set up. There is the lender and there is the borrower. In this situation the borrower is dependent on the lender to transfer title to the borrower once payment is received in full. The lender is dependent on the borrower paying off the debts as prescribed in the note or has the right to begin foreclosure proceedings. So even though we might refer to paying our "mortgage" each month, the more accurate description in California would be loan payment.

With a deed of trust, either the trustee or a hired agency by the trustee, will handle the foreclosure process.
It is the trustee that records the Notice of Default with the county where the property is located. If the borrower does not correct the default through payment, loan modification, or sale, the trustee moves toward foreclosure. This is why the public sale of a foreclosed home is called a trustee sale. This is the attempt of the trustee to retrieve the debt owed the lender. If the property does not sell, the property title (collateral for the loan) is turned over to the lender (beneficiary) and becomes part of the lender's asset portfolio known as REO or Real Estate Owned. Then the lender will most likely list the home for sale to recover any debt that is possible.

The actual note itself.
This is your promise to pay the lender. This document details the terms of the note. It will indicate the annual percentage rate charged. It will indicate the number of years (period) payments are to be made and will include any changes in the loan interest rate if an adjustable rate mortgage (ARM) is involved. Most likely, an amortization table will be included in this document that outlines for each payment what amount will be applied to the principal (a portion of the actual amount borrowed) and how much will be applied to interest (based on the interest rate applied for that period). It will also indicate how much the borrower will have paid in total at the end of the note. The most scariest number of all!

The CC&Rs (Covenants, Conditions, and Restrictions).
These are the binding "rules" established for the property and it is very important that the home buyer understand these items completely. Do not scan these documents. Read them. Your agent should provide a copy prior to release of contingencies and it is important to take the time necessary to understand the details. Breaking the "rules" can result in fines and/or even reversion of the property back to original owner. Amazing, but true.

The preliminary title report.
Offered by the escrow agent prior to closing. Ask any questions about outstanding liens on the property. Title insurance is purchased by the seller in order to provide good title to the new owner. Title insurance is also purchased by the buyer for the lender to confirm clear title. Here is a great resource on title insurance policies.

Determining how the buyer hold title.
The professionals best to advise a client on how to hold title is an attorney or a tax professional. The escrow officer or the real estate agent will not be able to assist in this decision. There are tax and legal implications to how title is held and therefore this decision must be thought out carefully in consideration of the buyer's estate. Here is an online resource to explain the different ways in which one can hold title to property in California.

This an overview of the process and depending on the type of property being purchased or the loan you will be utilizing to purchase the home, there can be additional documents that need your review and signature. Make sure that you are comfortable with every document that is presented. It is our job as professionals, to answer any questions you might have. Being informed appropriately for any document requiring signature is the best policy for this most important purchase. Ask your agent about any of these documents ahead of closing to be best prepared.

Don't Sell Without a Net!

CJ Brasiel (Fireside Realty DRE 01509579) — Tue, 17 Mar 2009 12:03:42 -0500

Not every real estate agent works a deal the same way. That is why every seller should make sure they insist on seeing what is commonly called the "net" sheet. Formerly, this is the "Seller's Estimated Proceeds" worksheet. It is exactly what the title implies, an estimation of the proceeds a seller should receive from the sale of their home.

This sheet takes in account the sales price, the anticipated closing date, the typical fees associated with the sales transaction and gives an estimated bottom-line for the seller. There's a signature opportunity at the bottom for the seller and the agent. But amazingly, many sellers never see a net sheet. The form is not required and some agents would rather you do the math or wait until the day you are sitting across the desk from the escrow agent and their pile-o-papers to see the bottom line. By the way, those agents are typically not at your closing.

When I sit down with a seller, many times before I have listed their home, we work out a net sheet. Every seller has a mental bottom line they want and there is no better way to see if that is at all realistic than by completing a net sheet. I also tell the seller when they list with me that there are two documents they will sign several times during the selling process. The agency disclosure and the net sheet. Anytime a change occurs in the selling process or a new player enters the arena, these documents need to be updated and confirmed by signature.

The net sheet indicates many items but here are the basics:

Projected Sale Price
Projected Closing Date
Lenders fees - loan payoffs
Escrow and Title fees
Sales Commissions
Property Taxes
Inspections and corrective work
Home Owners Association fees - if any
Any credits to the buyer
Estimated Seller Cash Proceeds

I use the net sheet with my clients constantly. I use it as a way to demonstrate different selling strategies and I use it as a way to demonstrate if their goal is realistic. In my mind it is the only way to be truly honest about the proceeds of the process. There are very few sellers who know all the different transaction costs involved. That is certainly one of the reasons why most hire a professional.

One other thing to keep in mind; it is an estimated sellers proceed. Why estimated? Because some items may adjust one way or another. For example, I enter the pay-off the seller gave me for the loan and when the actual pay-off comes from the lender it a different. Or the exact day of closing requires and adjustment in how many days of pre-paid interest will be credited back to the seller. Personally, I always try to make sure my estimate is on the conservative side so my seller is pleasantly surprised on closing day.

If you are a buyer you should receive within 3 business days of applying for a loan a booklet from HUD (Housing & Urban Development Department) explaining the settlement statement and costs involved. The HUD-1 settlement statement includes the costs both side may pay. You can download this booklet to review on the HUD web site. Your agent can also prepare a buyer's estimated cost sheet. You should always correlate the HUD and estimated buyer sheet and make sure you understand all the charges.

The bottom line; know your bottom line. Hold your agent accountable to providing an Estimated Sellers Proceeds document so you are not surprised on the day of closing the sale. Make sure you are working with a professional and you won't be selling without a net.

House Values in San Jose Decline. Should Your Property Taxes?

CJ Brasiel (Fireside Realty DRE 01509579) — Mon, 09 Mar 2009 18:28:52 -0500

In 1978, the ballot initiative "People's Initiative to Limit Property Taxation" was put in place by the voters of California. This initiative basically restricted the increase in property taxes per year to 1% of value. The result was a 57% cut in property taxes for California. This initiative also placed a high bar for change by requiring 2/3rds majority vote in local elections. The origination of this initiative came from the belief that older citizens should not be priced out of their homes via ever increasing property taxes. Valid argument.

Some argue it has limited the housing market re-sale side (less inventory,high demand, pushing prices up), has increased rents, and has created a demand for new construction on smaller and smaller amounts of available land. It has been argued that not only do the long term residents benefit from a demand partially created by Proposition 13, but also benefit in services paid for by new home owner's property tax rate. There is not doubt that Proposition 13 has contributed to the affordability issue for new home owners in the Bay Area. There are many opinions about Proposition 13 and the debate heats up again and again.

Now, as home prices decline many home buyers that purchased homes after the year 2000 are asking why they are paying the same amount for property taxes. My property tax bill actually increased this period in spite of losing $95,000 in equity from December 2007 to December 2008. Therefore, I wanted to offer some resources to help those who have lost value on their property and have yet to see an adjustment on their tax bill.

Recently, Santa Clara County Tax Assessor indicated nearly 200,000 property tax bills would be reviewed to see which were eligible for a re-assessment. This process is planned to be completed by June. In the mean time, you can apply for an appeal via the Santa Clara Tax Assessor's web site. There are two ways to make an appeal. You can make an informal appeal before August 15, 2009. If the assessor does not agree you can apply for a formal appeal between July 2nd and September 15th. There is also a great down-loadable booklet from the Board of Equalization that can explain the process of appeal. Click here for Frequently Asked Questions.

Be aware that recently many scams have popped up from companies wanting to charge you a fee to appeal your property taxes. Some charge upward to $200 dollars. The Santa Clara Tax Assessor's office charges a $30 application fee. The application is pretty straight forward and takes just a little home work on the part of the home owner.

If you need help gathering information on the market, let me know. I offer a complete market analysis of your home, indicating recent sales data, photos, and a value range that can be used to support your appeal. There is no charge for this service. Contact me if you would like more information.

The San Jose Housing Market and The Stimulus Dud

CJ Brasiel (Fireside Realty DRE 01509579) — Tue, 03 Mar 2009 19:31:40 -0600

I look for something positive to occur regarding real estate every day. For most of 2008, I embraced the hope that a new president promised. I started to get excited as I witnessed sales numbers go up while interest rates lowered to 4.8% in December 2008. I re-energized when it was official that the Housing Stimulus Plan was about to be approved.

The good news. Nearly 4 million home owners will receive help. Those who still have their jobs and are current on their payments, will receive help in modifying their loans. That is wonderful news. Unfortunately, less than 7% of homeowners in San Jose will benefit from the this plan. The following chart was provided by Zillow.

The good news. The plan will provide a $8000 tax credit for new home buyers. Unfortunately, those who qualify for the tax credit do not make enough to afford a median priced home in San Jose in this new lending environment requiring a minimum of 10% down and many times 20% down payment is required. Those who can afford a median priced home, make more than the maximum ($75,000) income allowed to receive the credit.

The good news. The stimulus plan sent money to the state and is promised to save or will create 400,000 jobs. Unfortunately, the Governor of California has implemented a
"1 percentage point increase in the sales tax in April and the higher vehicle license fee in May. By then, about 2.4 million out-of-work state residents will be receiving higher unemployment benefits and more than 2 million Californians will be eligible for more food stamp help, according to the Center on Budget and Policy Priorities, a Washington think tank."

The good news. There are lots of deals to be had in the real estate market. Nearly 40% of the San Jose housing inventory is represented by short sale listings and nearly 20% are bank owned foreclosures. However, more and more, offers from buyers with FHA loans and 3.5% down are being turned down by the asset managers because they do not believe they will close on time; if at all. The average FHA loan application takes 5.4 weeks to close.

The good news. Well, I am not sure exactly what the good news is anymore. Tomorrow is another day and the forecast says there will be some sunshine. One can only hope.

When it Rains, It Pours: The San Jose Housing Market

CJ Brasiel (Fireside Realty DRE 01509579) — Tue, 24 Feb 2009 01:00:41 -0600

It was raining this weekend so I was unable to show houses and had no open houses scheduled. Therefore my options were to read or study the MLS. Reading makes me sleepy so the MLS won out. Each day I hear a great deal from the real estate pundits trying to predict the housing market. Have we seen the worst of it? Are some neighborhoods at bottom? Where are the best deals for first time home buyers? Where are the best deals for investors? All, very important questions.

Many say the next "wave" for the distressed property market is in adjusting mortgages. I have been unable to find a source that tells me how many home loans are adjusting in San Jose. The challenge with that idea is that many loans are actually adjusting down not up. In general the logic is missing on why that would be the next wave except how it might apply to negative amortization loans.

To me the next wave of housing challenges are completely related to job loss. More specifically blue collar, manufacturing job loss. Why? The largest group to purchase homes using exotic loan products were the very people looking for a way to afford a house in the Bay Area on an average blue collar income. This very group were more likely to pool incomes from different family members and when one of those sources loses their job, the house payment is in jeopardy. Loan modifications are not offered to the unemployed, recently disabled, or recently divorced. The home becomes under water quickly.

Which leads us to the short sale process. Oh my, don't get me started. Bottom line, short sales are not being approved as quickly or as often as they should be to stem the tide of foreclosures. More and more short sales will move toward foreclosure. Another guaranteed, downward pull on the market.

The potential areas for deals are where the distressed property inventory is the largest proportion of the total active listings. This first graphs shows the number of short sale and REO listings as a percentage of the total active listings. There is no "bottom of the market" per se when short sales are a large majority of the active listings as those are the very listings that will move toward foreclosure and become bank owned.

Next the condominium and town home (attached) market. The Gilroy market has really taken a beating with the REOs. One of the listings, a 2-bedroom, 2 bath condo is for sale for $98,900. If that does not scream "investor", I am not sure what will. Yet, there are more deals to be had closer to Silicon Valley and this may be the reason why the condominium market has not moved faster in Gilroy.

But obviously the majority of the inventory for Santa Clara County resides in the city limits of San Jose. Therefore, I wanted to break down by neighborhood the distressed market, to see what patterns might present. I am going to go out on a limb and say that Blossom Valley, Santa Teresa, and Down Town San Jose are going to become the next hot bed for REOs. All three neighborhoods are seeing 2-5% per month drops already. The short sale process does not work well in dynamic markets. Whereas a REO agent sends an updated market analysis each month. The short sale agent only sends in a market analysis when an offer is received. By the time the loss mitagator gets to the file (If you are lucky, within 30 days.), the market can drop another 2% and not surprising, the buyer has found a better deal somewhere else.

Is the condominium and town home market any different for San Jose neighborhoods? I believe we can say that the investors and first time buyers will be scooping up the Alum Rock condominium and town home market. Close to down town. Great student rentals. Again, pulling out my crystal ball, I would say Berryessa is prime territory for the next wave of good deals on REOs.

So what to make of all these pretty graphs? First, a large portion of the distressed homes are still being kept up in the air by short sales. The process is not working to reduce these homes quickly. Second, we all know that the sooner we reduce the inventory of over priced or slow moving homes (because of repairs, location,etc.) we will have a better chance of stabilizing the market. If you are a seller, you should be tidying your house and adjusting your price down at least every month. Third, the key to a market turn around is showing buyers how they can be pre-approved in this new loan market and how to find the great deal in the neighborhood they want. Finally, we must do this all quickly before the next wave of job losses place more homes in jeopardy.

If you are an agent reading this, I encourage you to throw your opinion into the hat so readers can hear professionals discuss the market in Santa Clara County. If you are a buyer or seller, you need to be working with an agent who is as determined as a bull dog to work this market. Agents who are shy about short sales, hesitant to recommend FHA loans, or can't manage an REO will not be the professional that gets you through this current market.

One last point. Many of the neighborhoods have less than 20% of their inventory in distressed listings. It may be raining but much like our beautiful hills, sometimes it takes a good rain to make everything all green again.

Top 5 REO Deals in Santa Teresa - San Jose

CJ Brasiel (Fireside Realty DRE 01509579) — Mon, 16 Feb 2009 11:00:09 -0600

I love the Santa Teresa neighborhood. You have the wonderful Santa Teresa Park with 1,627 acres of trails and the historical Bernal-Gulnac-Joice Ranch that offers visitors a taste of how a ranch was ran in the early 1800s. Add in La Colina park for weekend soccer, kite flying, and picnics and you have a well rounded family neighborhood. I have biked many times along Curie and Colleen Drive to get to Almaden Lake Park and have many great memories of the area. As with many neighborhoods, Santa Teresa has seen its share of short sales and foreclosures. This week I wanted to point out a few homes with the intention of helping restore this great neighborhood to equilibrium.

As neighborhoods go, Santa Teresa has seen some stabilization in the market prices and with last quarter 2008 sales. Referring to the chart below you can see inventory is coming down, sales steady, and an almost neutral market between buyers and sellers. Of the 110 active listings, 27 are REOs and 49 are short sales. In the last three months, 31 homes sold (3 shorts sales, 21 REOs, and 7 traditional sellers).

The focus of the post is to share with you some potential deals in the Santa Teresa neighborhood. These homes are bank owned. Also referred to as REOs, foreclosures, or corporate owned.

Before you drive out, take a look at street view on Google. A great tool for scoping the street. This is particularly important for Bayliss. In 2005, this very home sold for $745,000. Now it is listed at a 33% discount from that peak value. Very nice home if you can manage the view.

Many of these homes are large and are great for extended families. Take Keeler Court for example. Great house with 2300 square feet, nice upgrades, on a nice neighborhood street. This home last sold in 2004 for $580,000. That definitely tells you a little bit about the market adjustment. Some predict by the time our housing crisis is over we will be back to 2002 prices.

The home on Camino Verde is literally at the entrance of the Bernal-Gulnac-Joice Ranch. Great park. I have seen wild pigs, wild turkeys, rattlesnakes, and lots of deer when hiking this hill. The views of the valley are amazing once you make it to the peak. Even if you don't buy this home, make a point of visiting this park.

Dondero Way has a bathroom for each of the four bedrooms. Of course, permits are unknown. Another great house with views of the hills. Non-permitted additions always present challenges. Many times I have found that permits were applied for but simply not finalized. If you want to investigate permits, San Jose offers an on-line search. This site provide a way to see what, if any, permits were submitted for and the status. A great resource for any buyer.

Pemba backs up to Santa Teresa Boulevard. It last sold in 2005 for $615,000 and is now listed at $400,000. This is a change in value of nearly 35%. With a little TLC this home could be a great start for a young family.

All of these homes can be found on Trulia. A great place to start your search for a home because it provides so much addtional information about the price trends and other pertinent market information. All of these homes are ready to show and if you would like to check them out please let me know. You can also search for foreclosures by map here. Whether you are looking for an REO or not, Santa Teresa provides a great chance for a new beginning in a great family neighborhood.

Your Real Estate Purchase Offer was Accepted. Now What?

CJ Brasiel (Fireside Realty DRE 01509579) — Mon, 09 Feb 2009 12:20:40 -0600

After looking at what seems like a million homes, you have found one you like, made an offer and your REALTOR called to tell you, "Your offer has been accepted and you are now in contract." Congratulations! Now what? First, your agent should provide you with a next steps to-do-list. I normally send an email message out to my clients outlining the steps to closing escrow and picking up the keys to their new homes. Here is a basic overview of the steps to completing the purchase:

1.) Immediately follow up with your loan officer and update any documents they might need. For example, updated pay stubs or bank account statements. Your contract date to release the loan contingency is X date. Review the Good Faith Estimate with your loan officer and REALTOR. Discuss a strategy of when to lock rates. Your deposit check will be held in escrow within 48 hours of confirmed acceptance of the contract.

2.) Make arrangements with your lender in regards to how the appraisal will be ordered and the manner in which it will be paid for. Find out the typical turn around for an appraisal report from your lender. Your contract date to complete an appraisal and to assess the value is X.

3.) Decide what inspections you want to complete on the home and schedule them asap. The contingency period to inspect the property per the contract ends on X date. If you need recommendations for inspectors, let me know. I always recommend you be there for the inspection but if you can or can not, I will be there. (Not all agents attend inspections.)

4.) Begin working on home owners insurance. You will need to complete any shopping and determine what type of coverage you will need and who you will be obtaining insurance from. Once you have an insurance agent and/or policy provide your lender with a copy of the policy information and agent contact information.

5.) Review disclosures provided by the seller in a timely manner. Ask questions and get answers. If further investigation is needed about any part of the disclosures provided, complete prior to releasing applicable contingency.

6.) Review inspection reports and decide if any repairs are needed prior to closing. Work with your agent to decide if any estimates for work are needed and schedule a time to obtain said estimates. Consult with your agent on whether or not any part of the contract should be amended based on inspection reported findings.

7.) If the home has a Home Owner Association, make sure you have received the Convenants, Codes, and Restrictions, Financial Statement, Insurance Policy for the Home Association. Review this big pile-o-papers carefully. Ask questions and get answers to any concerns you have about the HOA and/or management of the HOA.

8.) Talk to neighbors. Find out about the neighborhood. Walk around at different time periods. Assess noise, activity, parking etc., before releasing the physical contingency. I provide my clients with a list of questions for neighbors. I also recommend they visit CrimeReports.com and review police reports for the area.

9.) Appraisal OK, Loan Approved, Loan Rate Locked, Disclosures Read, Physical Condition Released...you are now very close to closing escrow on the home. Complete a final walk-thru to make sure all is as it was ( or better) when you made the offer. Review the Settlement Statement, referred to as the HUD statement with your loan officer and agent.

10.) Decide how you will hold title on your new home. Sign loan documents, title documents, final contract, and escrow documents. Bring a photo I.D. and a cashiers check made out to the title company for the remaining balance of closing costs and down payment. Once the loan has funded, the escrow officer will work with the county recorder to record the title in your name. Once recorded, your agent will provide you with the keys to your new home. Congratulations!

Now of course, this is the straight forward closing steps and it is not uncommon to have some zig zags along the way. Make sure you are in constant communication with your lender and REALTOR. Be aware of time lines and take time to read the documents provided. If you do hit some speed bumps, work with your loan officer and agent to find the solutions or the way out of the contract. When making this large of a purchase, do not leave anything to chance. If you stay on top of the process, the next phone call you'll be receiving is, "Congratulations! The title is recorded and you are now the new home owner!"

Foreclosured Homes, Inspections, and You!

CJ Brasiel (Fireside Realty DRE 01509579) — Mon, 02 Feb 2009 14:30:59 -0600

Many real estate agents will recommend that a seller obtain inspections on their home prior to listing the home for sale. "Why should I get an inspection? Once we know what needs to be repaired we will have to fix it." Well, that is one way to look at it. There are other things to think about. First, knowing the repairs ahead of time and completing them, places your home in the best possible position to earn top dollar. Well maintained homes are more likely to receive the higher price compared to a home where maintenance has been avoided.

Second, If you as the seller accepted a low offer and then have to negotiate repairs mid-stream it can be more costly and discouraging. If you, as the buyer offered a high price and then find out mid-stream the seller does not want to negotiate the cost of repairs, the deal can become quite frustrating very quickly. A well maintained home can prevent these issues and the stress of the contract is reduced.So what happens when you are looking at a foreclosed property for sale? Short sales, REOs, "bank owned", "corporate owned" properties rarely have inspections available for the buyer to review. As a buyer, many agents will say you are "on your own" to obtain inspections. Distressed homes are sold "AS-IS". This means that the seller does not intend to make any repairs and therefore the buyer should make the offer subject to the property's current condition.

Inspections can be costly. Once a buyer has written checks for a home inspection ($300-$500), roof inspection ($125-$150), chimney inspection ($125-$150), pest inspection ($150-$175), it is hard to turn back on the deal. If you cancel the contract due to repairs, you are out the inspection money. If you move forward with the contract you may be able to have your agent negotiate a credit but most distressed property contract addenda have redundant paragraphs indicating the buyer agrees to "AS IS" condition.

As a buyer, you might ask, "Do I need all these inspections?". Even in the worse case scenario where a foundation inspection is necessary ($600-$3000), a buyer might end up spending $1000 to $4000 on inspections. Realizing that the median home price in San Jose is $580,500 we are talking less than 1/2% cost on a major life investment. Is it worth spending $4000 on a half-a-million dollar investment that will be your primary home? Only if you are sure a foreclosed home presents the right deal at the right time. Remember, most private sellers (not bank owned/corporate owned seller) will negotiate repairs and sometimes (particularly in a "buyer's market") they are willing to share the cost of inspections. The foreclosure has to be a very good deal for this to all work out well.

But there are ways to reduce your cost on inspections without throwing away the security of knowing the condition of the home. Even with a foreclosed or short sale property.

For wood destroying pest reports, the Structural Pest Control Board for the State of California maintains copy of any reports completed on a property for two years. Therefore, a buyer can look up the address and see if any previous reports have been completed and request a copy. For free. The state of California states that a pest report is good for 120 days. (Remember, left untreated, termites keep eating.) If the report is under 120 days, ask for the original company to come out and update the report. This is your first opportunity to reduce inspection costs. If you want to learn more about Northern California termites and the costs associated with repairs call Will McCoy at Terminators.

Secondly, a home inspector can help shed the light on suspicious areas requiring further investigation by specific professionals. For example, damp crawl spaces with effervescence can imply a foundation inspection is needed. Missing roof tiles or damaged shingles can indicate the need for a roof inspection. Cracks noted in the chimney can imply a complete chimney inspection would be a good idea. I always recommend my clients be there for inspections. You can ask questions and learn a great deal.

Finally, your real estate agent has looked at a lot of houses and should have a good eye for suspicious items. I am not an inspector but I can certainly point out areas that stick out as potential issues. I always recommend, at minimum, a home inspection and pest inspection on any home I represent. In my opinion $300 -$500 is well worth a client's peace of mind.

Are FHA loans the answer for San Jose buyers?

CJ Brasiel (Fireside Realty DRE 01509579) — Wed, 28 Jan 2009 12:21:53 -0600

Before I go too far, let me say that I am not a mortgage professional and that I always recommend buyers talk to a mortgage professional to decide which loan product is best for them. I write this post because I believe there are many nay-sayers telling buyers there are no loans for them. They also tell buyers that the only loans available require 20% down and credit scores off the charts. That is simply not true.

Prior to 2008, FHA loans were very rare in San Jose and the general Bay Area because the maximum loan limit the government would secure was $417,000. This was the beginning of the exotic loan product season. For those that did not have 20% or were purchasing a home that cost more than $417,000, interest only, no down payment loan products were created. It was the affordability answer for many.

The FHA loan limit for Santa Clara County is now $625,500. This opens the flood gates for FHA loans to be made and many mortgage officers are dusting off the requirements and learning how to complete FHA loans in a hurry. The FHA loan is a different animal and FHA underwriters and approved appraisers have a little more red tape to go through before blessing a buyer on a purchase. However, with this said, FHA loans provide those who have reasonable credit, good salaries, but not much money to put down, a way to buy a home in the Bay Area.

Some will argue that FHA loans end up costing the buyer more. Any loan will cost you more when you do not have 20% down and exceed the maximum insured amount of $625,500. Simple fact. But let us look at the difference between what is required to close for and FHA loan verses a conventional type loan.

The obvious difference comes in the form of down payment. Even with the required impounds, FHA insurance premium, and reserves, the buyer who finances with FHA comes to the table with less.

Obviously, if you place more money down, you will open the door to lower interest rates. With a conventional loan and 20% down, you will not pay mortgage insurance.

The difference in monthly payment for this example would be approximately $500.

The FHA charges a premium to fund their loans and that very much depends on your credit score. If you want to save money on loan costs, bump up your credit scores and reduce your debt-to-income ratio (DTI). This is called the FHA premium. It can be financed into the loan or paid at time of closing.

Also, consider that FHA allows the seller to credit the buyer up to 6% of closing costs. This can be an incredible bonus in the current buyer's market. Where previously sellers almost rarely helped buyers now many sellers realize if they are going to sell their home in this market they need to help make it a win-win. Remember the $42,094 in the above example? Ask a seller to pay 3% of closing cost and you now have lowered that number to $27,094. Ask for another 3% and buy down some points so you can lower your monthly payments and you will be very close to reaching the monthly payment of a conventional loan.

If you want to learn more about the mortgage industry and the ins and outs of working with mortgage officers, I highly recommend the book, Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, by David Read.

There is no doubt that this is a tight lending market. However, everyone involved in the U.S. economy knows the only way to work our way out of the housing crisis and begin reasonable appreciation means extending credit. The government has provided a way for potential San Jose buyers via the increased loan limts for FHA backed loans. With current interest rates hovering around 5% for most borrowers, there is opportunity to take advantage of lower prices and lower rates. It may not be the right answer for everyone but it is a good place to start if you are in the market to buy a home.

Thank you,
CJ

2BR/1BA Zoned R2 Near SJSU - GREAT Investment for San Jose,CA

CJ Brasiel (Fireside Realty DRE 01509579) — Mon, 12 Jan 2009 15:26:33 -0600

Great Investment Opportunity!

855 Julian Ave
San Jose, CA 95112

Price: $325,000
Main Features:
Single Family Home,2 Bedrooms,1 Bathroom,Interior: 1029 sqft,Lot: 4,500 sqft

More Info: http://listings.realbird.com/Real_Estate/Great-Investment-Opportunity-/San_Jose/CA/D6C3C6B3/21827.aspx

Description:
Great investment opportunity. Cute little bungalow built in 1926. All orginal and in need of some basic repairs and updates. Good tenants want to stay if possible. Property is zoned R2 and has a detached garage that has electric and water. Has potential for another rental unit. Check with city planning! Just a quick walk to San Jose State University, mass transit, downtown dining and entertainment.

Call CJ for more information 408-406-6035

4BR/2.5BA Blossom Valley Home San Jose - Large Lot - Ready for a deal?

CJ Brasiel (Fireside Realty DRE 01509579) — Mon, 12 Jan 2009 14:53:35 -0600

Large Lot Home 4BR/2.5 Bath Blossom Valley
4387 Pitch Pine Ct, San Jose, CA 95136

Price: $649,900

Inside: 2209 sqft

Lot: 9,292 sqft

More Info: http://listings.realbird.com/Real_Estate/Large-Lot-Home-4BR-2-5-Bath-Blossom-Valley/San_Jose/CA/D6C3C6B3/28482.aspx

Description:
This is a great home in Blossom Valley waiting for your special touch. Positioned on a cul-de-sac there is no through traffic and lots of privacy. A large lot provides plenty of room for pool or gardening. Several fruit trees and a hot tub exist on the lot. The interior boast double hung- double paned windows, high ceilings, open floor plan and 2209* square feet. There is a balcony off the master suite which will allow for those afternoon sunsets. This home is not on MLS and is shown by appointment only. Please call CJ to set up your showing. 408-406-6035

It needs some updating but don't be shy! The sellers are motivated and are willing to provide credits toward closing costs, new carpet and paint! They are moving and simply don't have time to spruce up!

Great News in Real Estate 2009!

CJ Brasiel (Fireside Realty DRE 01509579) — Sat, 10 Jan 2009 14:13:11 -0600

As a real estate professional, I can only watch so much T.V., read only so many Internet articles, only listen to a certain number of people before I end up back in my peaceful sanctuary mumbling to myself. You might be surprised to hear that my sanctuary is not a place of worship or a bar but - out in the neighborhood looking at homes for sale. Yep, I love looking at houses. In some ways, I enjoy it more now then in the boom years.

I can’t tell you how many times in the last six months that I have unlocked the door of a house, walked through, and said to myself, “Not bad.” Then looked back down at my listing sheet to confirm the price and said, “Not bad at all.”

My escape from the constant bashing of the real estate market results in a scrap-book-like frenzy of putting together pictures of homes for clients who have wanted to buy for years but simply could not afford the kind of home they wanted in a neighborhood they wanted to live in. Now, I am able to call them up and say, “I think I might have a home you might be interested in.”

I know. You’re thinking, “But who can get a loan in this market?”. Guess what? There are literally thousands of hungry loan officers out there ready to find you a loan. If there is a way, they can find it. Not the crazy exotic loans. Those are not even available anymore. Good-old-fashioned fix rate loans.

Since I titled this blog post “ Good News in Real Estate for 2009” let me get to the point.
First and foremost, like Alan Murray stated in the Wall Street Journal, this is a good year to invest in real estate and “you can benefit from a once-in-a-lifetime double bonus of low prices and low interest rates.” Take a look at the graph below. If there are deals to be had with foreclosures, we have the inventory of foreclosures to make a lot of deals!

In addition to falling prices, all the previous years of begging on behalf of my clients for sellers to help with closing cost while the listing agent displayed that gentle gesture of “talk to the hand” has provided me with amazing confidence to negotiate closing costs paid by seller on almost every one of my deals. Closing cost on a loan can be any where from 1.5% to 3% depending on the loan type.

Secondly, affordability is coming back to the Bay Area, according to The California Association of Realtors, “the percentage of households that could afford to buy an entry-level home in the state rose to 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago.” Specifically for Santa Clara County, “the affordability index rose to 39 percent from 21 percent.” The “affordability index” measures the percentage of households that can afford to purchase an entry-level home.

Third, prior to 2008 almost no FHA loans were available to buyers in the Bay Area. Why? The loan limit for FHA loans was $417,000. In 2008 that was temporarily increased to $729,000 and in 2009 will be $625,500. In my humble opinion not having the FHA option prior to 2008 is part of what created these exotic loan products that placed so many buyers in losing situations. Why are FHA loans important to home buyers? Because FHA only requires 3.5% down payment for qualified borrowers. This also helps with affordability because for those buyers who can afford the monthly payment but do not have 10-20% down, they have an option not available prior to 2008.

Fourth, rental rates are going up. In fact since 2005, San Jose has seen a 26% increase in rental rates. Analysts are projecting rents will rise nearly 10% annually over the next several years for a two-bedroom rental.

For this next point I have to disclose: Because tax rules vary based on income and other factors, you should consult an accountant or financial advisor for advice on your particular tax situation. The fifth reason is the tax benefit of owning a home. Where else can you get a tax-free gain of $250,000 if you are single and $500,000 if you are married on your investment? Also interest on the home loan, property taxes, lending costs in the way of “points”, and moving expenses are all possible avenues for tax savings.

Believe me, I could go on and on but won’t. I also want to add that it is NOT the best time for everyone to buy. I DO NOT think all is roses and pushing someone to buy anything is a very bad strategy. What I do believe is that if you have wanted a home and thought you would never be able to afford the Bay Area, now is the time to reconsider that premise. Find an agent that you like, that you trust, and that gives you all the time and information you need and buy a home. It may very well end up being the best year for investing in real estate.

Top 10 "Corporate Owned" Homes In Blossom Valley San Jose

CJ Brasiel (Fireside Realty DRE 01509579) — Mon, 20 Oct 2008 10:53:47 -0500

Yes, "Corporate Owned" is the new phrase being utilized on the multiple listing service (MLS) to describe a home foreclosed upon and belonging to a corporation. These listings are also called "bank owned" or REO (Real Estate Owned) properties. With the recent bail out plan we may have to add another description, "tax payer owned" or TPO for short. Sad, but true.

One of the complaints I hear from clients searching the MLS is that they are unable to tell by the description whether or not a home is a "regular sale", short sale, or REO. This is a bad practice by many agents but they are not required to give that information to the public. They are required to indicate it to other agents. Again, why I advise all buyers to have an agent that is representing your best interest. After you have found a home on the MLS have your agent find out what type of listing it is.

Private Seller - Someone who has equity in their home and is most likely a motivated seller because who would be listing their home for sale in this market unless they really needed to move? Well, that is not completely accurate because many home owners that have equity are seizing this opportunity to buy a larger or better home. They are motivated sellers but are not desparate sellers.

Short Sale - Someone who owes more on their home than the current market value will pay. This could be because they were a victim of fraudulent lending practices or because they over extended themselves on their home based credit. Either way, there is no way they can make their loan payments anymore and selling the house means they will have to get the original lender's approval to take a loss. The trick is that many of these homes have two lenders ( a first and second lien) and therefore need permission from both. Average time to get an approval? Anywhere from three weeks to six months. No joke.

Bank Owned, REO, Corporate Owned - The home has been through the foreclosure process, no one bought it at the auction/trustee sale and now they are simply trying to make whatever money they can on the property and get it off their books. Not uncommon for these homes to be priced below market value in the hope of creating a frenzy amongst buyers. Most of these "sellers" will reply to your offer verbally via the listing agent within a week with "bring us your best and final offer". That means they have multiple offers and they will submit the best to the seller for approval.

If your offer is "approved" you will typically receive a verbal message from the listing agent. In the next 3-5 weeks you will receive a document back from the bank stating acceptance with an attached addendum agreement. The addendum is pretty scary for the typical buyer. The addendum includes "passive contingency periods" which means that if you do not remove said contingency by said date, it is automatically removed. The problem with a passive contingency period is that you and the seller may have a different opinion on when the contract clock started. In a typical transaction, the contract clock starts when acceptance is acknowledged. Not necessarily true for a corporate owned property. Make sure your agent writes into the addendum response that the clock starts on said date or X days from receipt of acceptance. (Considered a ratified contract.) The same goes for close of escrow. It should not be written by the offer date but 30 days from date of acceptance. Anything that makes you late on close of escrow could cost you anywhere from $100 to $200 a day in "per diem" charges.

The top 10 bank owned properties in Blossom Valley is a little bit of a misnomer. There are actually 27 and that does not include condos or town homes. This is to make the point that the housing crisis is a neighborhood by neighborhood issue and sometimes almost a street by street issue. The number of bank owned homes in Blossom Valley account for 11% of the homes for sale. Compare that to Willow Glen where less than 5% of homes for sale are bank owned.

Which listings that have been on the market the longest?

4873 Rue Le Mans at 403 days (August 2007 $ 739,888 - now listed at $494,900)

153 Hayes Avenue at 214 days (February 2008 $599,900 - now listed at $494,900)

344 Colville Drive at 205 days (March 2008 $680,000 - now listed at $644,900)

Questions to ask your agent about any home that is listed as corporate owned:

1.) How many offers have been received on this home and have any been submitted to the seller?

2.) Are there any un-permitted rooms additions on this home?

3.) Do I have to be pre-qualified or pre-approved by a specific lender to buy this home?

Here is the list of corporate owned properties in Blossom Valley. If you would like to know more about any of these listings, contact me and I will be glad to find out the answers to these questions as well provide you a current market analysis of the neighborhood and any comparable properties for the area. Of course, if you would like to see one of these properties, I am happy to unlock the door for you!