The Silicon Valley real estate market is picking up, but we are primarily seeing that in entry level housing in more affordable areas of San Jose such as Cambrian Park, Blossom Valley, and South San Jose. In Los Gatos, Monte Sereno and Saratoga, it’s still a tough time for selling a home.
Luxury condos have been hard hit too since people who could buy an upscale townhouse may instead opt to simply buy a house in a less expensive area.
Below please find a graph displaying the aborption rate of both single family homes (houses) and condominiums and townhouses in Los Gatos. This measurement is the relationship between available inventory and homes which sold and closed escrow that month. (For instance, in March in Monte Sereno, there were 36 homes for sale and just one closed escrow – my listing on Francesca Court – so that makes for 36 “months of inventory”.)
Six months of inventory is considered neutral. Less than six months is a sellers market. More is a buyers market. As you can see, we have been in a deep buyers market in Los Gatos for awhile.
What is the opportunity here? This is actually a great time for people to “move up” because the lowest priced homes are moving and the higher priced homes are a bit stalled out.
If you would like more data, I invite you to visit my Silicon Valley Real Estate Report online to get all the stats available for Santa Clara County. Below, please find a few quick links:
The Town of Los Gatos is updating its general plan and is holding workshops to get the public’s input. The next one is Saturday April 18th from 10 am to 12 noon at Calvary Church, 1633o Los Gatos Boulevard (in the Parkside Rooms).
The Town Council has identified these areas as topics to consider: recreation, parks & open space; green building; youth and senior services.
In the spring of 2009 had the pleasure of listing and selling a stunningly beautiful Monte Sereno home. This house had been on the market the year before with a different agent and brokerage but had not sold after many months. This was a tough time for the Monte Sereno real estate market…. When that listing expired, the owners contacted me to assist them since they had seen this blog and several of my other online sites and tools, and they felt that I had an excellent pulse on the market.
With a change in marketing and a small change in pricing, we got it sold in just 24 days! The inspections and appraisal went well. The disclosure paperwork was handled, everything seemed to be going along fine with this escrow. . . .
Sometimes, selling the home is just the beginning of the challenge in getting it closed
However, there was a huge hurdle that none of us saw coming. The buyers pulled the permit history for this house from the city of Monte Sereno and to everyone’s horror, the file stated that the home was built with a permit, but that it was never finaled (or given the city’s final “OK”). Understandably, this was going to be a significant issue to the buyers, who naturally expected something as basic as a final on any home they would purchase. (There are risks with insurance if it’s missing.)
It did not seem possible that this exquisite home did not have a final for a number of reasons. First of all, the home was built by an exceptionally good builder, Rick Raynes of RAR Construction, and he was the first occupant of the house. Getting homes built, approved, and sold is what he does professionally so the odds of his forgetting something major like getting a final seemed infinitely slim (turns out, he didn’t – more on that below). Second, the home was improved many times but there was a “gap” in the file history of about 10 years. How likely was it that nothing was done in that time that required permits and finals? Third, in 2006 the owners at that time did a master bathroom remodel and got it permited and finaled. Wouldn’t the city of Monte Sereno have noticed, when doing that paperwork, a huge problem such as the final not being in the file?
So for a number of reasons, the sellers and I did not believe that the Monte Sereno building permit history file was complete on their home. Unfortunately, though, what we believed didn’t matter. What matters is what you can prove, and in the case of building permits and finals, you’re guilty until you can prove yourself innocent.
What to do?
“The Solution” did not look like it would be easy, fast, or cheap. The building inspector for Monte Sereno, Howard Bell, informed me that the way to remedy the problem would be to reactivate the initial building permit (17 years later – pay the “road impact fee” and and other fees over again, amounting to thousands of dollars – we were warned it would be between $5 and $10 thousand) and then to bring some aspects of the property up to 2007 code for some health and safety issues. Sound expensive? You bet it would be.
My goal was to get the home sold and closed without my clients being penalized for something that either wasn’t wrong or wasn’t their fault if it was wrong (and of course, treating the other side of the transaction fairly and honestly too). I picked up the phone and called other Realtors in Los Gatos whom I thought might have bumped into a problem like this: I was seeking to find a better solution than the expensive one that Monte Sereno insisted that we needed to do and overturned every relevant stone I could find.
One agent suggested that I call the Town of Los Gatos to see how it might handle such a problem. I did, and it learned that they take homes on a case-by-case basis and often the solution is very quick and inexpensive – relatively easy compared to reactivating an old permit and bringing some aspects of a home up to current code!
Next I spoke with Brian Loventhal, a pleasant gentleman who’s the city manager for Monte Sereno. I explained my concerns, my sense that the file was incomplete, and other easier alternatives that might help solve the problem without punishing the sellers. He promised to speak with the city attorney and the building inspector and get back to me. (After a week or so, he let me know that after the city attorney did some research, the answer was the same – do the upgrades to the home to fix the permit problem. They were unbending – this was a problem that we simply had to fix if we wanted the file to show that the home was finaled.)
Next I located and phoned the original builder, Rick Raynes, to ask if he had any paperwork on the home. Rick said that the home was finaled, but that he didn’t have the paperwork for that – it had been many years since he owned and sold it. He was generous with his time and was in disbelief at what we were asked to do by the Monte Sereno building department.
We waited to hear back from the city manager and hoped that Monte Sereno would come up with a more reasonable solution. Meanwhile, though, the clock was ticking. In home sales, time is always of the essence. After a few difficult days of waiting, my clients decided to go ahead and re-activate the building permit (about $8000 in fees) so that Howard Bell, the Monte Sereno building inspector, could walk through the home and give us a to-do list.
Within a couple of days, we had that inspection and got a lengthy punch list of 29 items that Howard Bell required for the final. This was not going to be inexpensive, as it involved staircases, electrical work, and thresholds, among other things.
The buyer’s agent and I each brought in contractors to get a dollar amount. Hers weighed in at about $24,000. Mine came in at around $8000.
Rick Raynes: Builder, Contractor, Go-To Guy, Superhero
I phoned Rick Raynes again – would he please do a bid for these upgrades? We all agreed that he does good work.
Rick couldn’t believe that we were having to do all of this; in fact, he was really upset about it and promised me that he would talk to the folks at Monte Sereno and see if he couldn’t set things right for us. He spent quite a bit of time in efforts to assist us, and I need to note that this was above and beyond any builder’s duty 17 years after construction. The next day, Rick Raynes phoned me and said that he had good news: there was proof, from a letter in 2000, signed by Howard Bell himself, indicating that the home really did have a final. We arranged to meet a few minutes later so that he could give me the letter.
Needless to say, I hugged him on sight. My sellers screamed for joy when I phoned to tell them that we’d be getting their eight thousand dollars in permit fees reimbursed, and that there would not need to be upgrades to the home to get the final. We have it, thanks to the sleuthing of the incredible builder, Rick Raynes. (Brian Loventhal later did apologise on behalf of the City of Monte Sereno, and he did make sure that the owners were refunded their money in fees within the week.)
How did this Monte Sereno permit and final mess happen?
Apparently Howard Bell had put that same letter in an “electronic file” with the City of Monte Sereno. Was it misfiled electronically? Are there simply two filing systems for permit and final records in Monte Sereno? Were these archives which were saved electronically? Possibly the latter.
Whatever the case, this whole nightmare with the permit and file status of my listing in Monte Sereno was caused by incomplete and inaccurate records in the building department of that city. So much upset was caused, and so much time wasted: not just the buyers’ time and the sellers’ time, but also the agents, the city of Monte Sereno employees, the contractors who came out to give us bids.
What can you do to protect yourself from being victimized by a building department’s errors, if you are a homeowner?
Always keep a copy of your permits, finals, and inspections. When you sell your home, give those records to the next owner (it would not be a bad idea for you to keep a photocopy of them for yourself). Do not count on the city, town, or county to have accurate records: often things are missing or misfiled. Usually it’s not a problem of this magnitude, but it’s possible.
(1) Pull the history, but understand that it might be wrong. Realtors know that building permit files are often incomplete. Buyers and sellers may pull permits, but the information gleaned may not be correct. If you request the permit history, and get the file, it may be difficult to read or interpret what’s meant.
(2) Overturn every stone. Check every avenue for resolution. There may be hidden information that can be a big help – it may just be a matter of finding it. I am grateful to the many Realtors and other real estate professionals I spoke with during our long three weeks of permit limbo for the direction, guidance, hints and insights they provided to me. Never underestimate the power of continually asking questions and seeking outside help.
(3) A great builder is worth his (or her) weight in gold. Rick Raynes did not have to drop everything to assist us in addressing this massive failing in the Monte Sereno building department’s files for my listing. But he did, and he solved the problem for us, saving my clients between $16,000 and $32,000. This is an “above and beyond” contractor who not only does fantastic, high quality work, but he stands behind it years past any legal or contractual obligation. Rick does both residential and commercial projects. Needless to say, Rick Raynes gets my highest endorsement! Here’s his contact information:
(4) Keep your own permit file. Do not rely on any government entity to have a full and complete file. Remember, this is one area where you’re guilty until you can prove you’re innocent: and that can be a very expensive spot.
For more reading on Monte Sereno homes & housing market
Los Gatos is plenty green these days after so much recent rain, and today the weather is pleasant so get out and enjoy yourself!
C Hannegan’s (208 Bachman Av., almost at N. Santa Cruz Ave.) is again doing an all day blowout from 11am to midnight today. As always, there will be live music, Irish food & drink. Cost is $50 per person. (If you go during the daytime, please pay attention r.e. parking – in the residential area, parking is restricted in the evening to residents with stickers on their cars!)
Need more to do? Here’s a very comprehensive list of St. Patrick’s Day activities and events around Silicon Valley:
There are a lot of frustrated, tired home sellers in Los Gatos, Monte Sereno, Saratoga, and all over Silicon Valley. Their homes are on the market but are not selling. That’s exhausting and discouraging!
They want to know a few things:
why isn’t my home selling?
why did another home sell, rather than mine?
what do I need to do for my home to sell?
what should my agent be doing to get me a good offer?
Usually there are multiple issues, of varying importance, which impact a home’s ability to sell. The biggest and most obvious one is price. Drop the price low enough, and of course it will sell. Price reductions are the ultimate remedy to non-selling.
Often, though, there are other things at play too. By tweaking some of them, it may be possible to take a lesser hit on the sales price and ultimately to net more from the sale of your home.
Starting Point: Understanding the Situation in Silicon Valley’s Real Estate Market Today
Want to list AND sell your home? It all begins with a realistic understanding of the current market in terms of price, condition, and the odds that your home will sell
Price: The brutal truth is that most homes in the Los Gatos area (Almaden, Saratoga, Monte Sereno, Cambrian and Campbell) are not what they were worth yesterday. The peak has passed us by. Relative to the past, many homes would sell for about the same as they’d have sold in appx 2002 to 2004. While this isn’t true for every home, it is true for a great many of them. If your home is in that category and you estimate it’s now worth a 2007 or 2006 price, you’ll be too high and your home probably won’t sell.
Want your home to sell? It will probably have to be in the bottom 20% of pricing for similar homes on the market to get an offer. To get yours sold, you have to be the cheapest home and the best value for the money. That’s not pretty and it’s not comforting, but it’s the truth.
Condition: Buyers have never been pickier! Most buyers demand a turnkey home which you have taken pains to remodel, tastefully and with permits/finals. They want to know that they will not have to sink money into a new roof, furnace, pipes, kitchen remodel or anything else. A few will be able to see through old paint and carpet but most can’t. To sell, a home either needs to be the “shiney penny” or it needs to be priced like a fire sale. Most often, it’s cheaper to improve the condition a bit rather than drop the price like a boulder. Most sellers have a fair amount of work to do to get their homes ready for sale.
Odds: This part is really hard for most sellers to grasp, but it’s probably the most important thing. Statistics show that the odds are not in your favor for selling your home. Most homes won’t sell. How bad are the odds? Depending on your home’s location, condition, price point, school district, and other factors, it ranges from about a ten percent chance of selling to a twenty four percent chance of selling. In other words, you have to be extraordinary to be in the category of homes that DO sell.
Why Do Some Homes Sell?
They are usually priced low, are easy to see, are well marketed, and create a situation where buyers are confident going into the escrow (they have presale disclosures and inspections, among other things).
What’s Needed: Right Price, Right Condition, Right Marketing
Getting the price right is not always easy, especially when there are very few sales that would qualify as “comps”. Sometimes, too, the condition seems OK to owners and agents, but buyers may not feel that it’s OK at all. This is information that you need to know!
Feedback on condition and price: Some agents never call or email to see what showing agents or their buyers had to say about the home. I have heard a few agents tell me, “The only feedback I need is a signed contract”. That is really not helpful to a seller or listing agent. Some of the negative feedback, while unpleasant to hear, is helpful in aiding sellers and listing agents to remedy problems that cause buyers to pass the home by. Not getting feedback is like having a doctor tell you what you want to hear rather than what you need to hear: you may feel better in the short run, but the long term damage is much worse than the short term discomfort of hearing why your home is rejected.
If your home hasn’t sold, there’s a good chance that the price and condition aren’t up to the challenge of this difficult market.
Most common issues that I hear from my buyers are these:
the home needs too much work (buyers cannot or will not remodel)
the home is too dark
there are bad odors (pet odors, cooking odors, cigarette, incense or other)
the home feels very cramped and crowded
While the first issue may be a challenge, the last three are all fixable. A good agent can assist you in lightening up the home, removing odors, and making the house or condo feel more spacious. These will require work and/or expense on your part, but often it is cheaper to do the improvements and staging than it is to continue dropping the price!
Marketing: The marketing is very key, it’s your home’s face to the world! Some real estate professionals mistakenly think that if the home is on the MLS with a basic description, no more is needed. If it doesn’t sell, just reduce the price! This is, of course, short sighted!
Here are some marketing problems I see which can hinder a home’s ability to sell for top dollar:
not enough photos in the MLS
no virtual tour
not decluttering the home for the photos and for showings
poor description in the MLS, using vagues phrases and no specifics
not exposing the listing to major websites (little or no syndication)
no sign, lockbox, or MLS – home hard to show (appt only)
poor commission rate to buyers’ agent (this is a marketing cost too)
no networking (brokers’ open or other means of exposing the home to the buyers’ agents)
Sometimes there are peculiar issues that are not covered in this general post. A rare few number of real estate professionals are very much disliked and distrusted, and other agents may avoid showing those homes if possible. Of course they aren’t supposed to do that but it has been known to happen.
Would you like a no obligation consultation on why your home hasn’t sold, or how to get it sold in a challenging market? Please give me a call or send me an email for a confidential meeting. Or request an online range of values by completing a form at www.SiliconValleyHomeValue.com.
Winter is a great time for dirt, leaves, and other debris to pile up in your rain gutters. Leave it long enough and there will be buildup. Leave it a really long time and those bits of dust, plantlife and other things will mush together and decompose, eventually becoming plant-worthy soil. Add a few seeds and some rain, and before you know it, green sprouts are popping up on your roof.
Today I passed a home in Los Gatos in which this seems to have happened. Grass and weeds were sprouting out of the rain gutters and had crept onto the roof quite a few inches.
Why is this a problem? Because the more you grow things on the roof, the more moisture you have getting trapped up there and the faster the roof decomposes. You don’t want things like fungus and dry rot to munch away at your home, but having plants grow on your roof is going to lead to exactly that.
Keep your gutters clean so problems like this do not have a chance to start. It is infinely easier to prevent this than to cure it.
(Not a great photo – taken with my treo’s camera and enlarged to show the roof but trying to keep the house itself anonymous.)
On the offchance that you haven’t heard of the latest real estate scam related to declining property values, be on notice that residents throughout Santa Clara County are receiving invoices from an agency that appears to help homeowners get their property taxes lowered – for an outrageous fee.
The scam notices come from “Property Tax Reassessment” in Los Angeles and it claims that your property values have delined to far lower than your assessed value. We have lived in our Belwood of Los Gatos home for about 9.5 years, so our assessed value is far lower than market value (even today), but this document claimed that our property should be reassessed at about 20% lower still. My response to Jim, my husband, was “Thank goodness their proposed value is wrong”. In fact, it’s off in our case by about half.
Please, if you get this nonsense in your mail, just shred it.
You can check comps for your home online very easily and at NO cost at Zillow.com, Cyberhomes.com or on my Real Estate Report under the Property Analysis tab.