Senate passes FHA modernization bill

Great news especially for us Californians. Finally the limit on FHA insured loans are being raised to $417,000 from $362,790. It isn't a significant increase for us here where the average priced home is nearly double that amount, but it is a stop in the right direction. The bill would also increase the likelihood of homeowners facing difficult times right now get refinanced into federally insured mortgages!

SENATE PASSES FHA MODERNIZATION BILL

In a significant victory for REALTORS® and homeowners across the country, the U.S. Senate on Dec. 14 approved legislation designed to modernize the Federal Housing Administration’s mortgage insurance program by increasing loan limits, and helping troubled borrowers with subprime loans refinance into federally insured mortgages.

The FHA Modernization Act, approved in a 93-1 vote, would increase loan limits for FHA-insured loans from $362,790 to $417,000, to mirror current conforming loan limits Fannie Mae and Freddie Mac may now purchase. In addition, the Senate bill would allow the FHA to insure refinanced loans for borrowers who are delinquent on their mortgages, due to ballooning payments on subprime loans.

“This is a tremendous victory for REALTORS® and C.A.R., and I want to thank each and every one of you who responded to our ‘Calls to Action’ and urged your elected officials to help us pass this bill,” said C.A.R. President William E. Brown. “The Senate’s action marks the overcoming of a major hurdle in our efforts to provide safe alternatives for financing a home mortgage, not only for those borrowers who are facing foreclosure today, but for future homeowners as well.”

The bill, which has the support of the Bush administration, also would reduce the required minimum down payment for an FHA-insured loan from 3 percent to a flat 1.5 percent of the appraised value of a home.

The House passed a separate FHA overhaul measure in September, but there are several differences between it and the one passed by the Senate. The House bill, for example, would increase the FHA loan limit to $729,750, or 175 percent of the Conforming Loan Limit. The House bill also is pushing for a 0 percent minimum down payment, compared with the Senate’s 1.5 percent. The house bill would allow risk-based pricing for FHA mortgage insurance premiums, while the Senate version opposes it. Both bills would categorize all condo units as single-family units.

Both the House and Senate measures will now be carefully scrutinized by a conference committee for comparisons and reconciliation of their differences. Once a final bill can be crafted, it will be sent to the President for signature.

Meanwhile, C.A.R. will continue its efforts to work with California’s congressional delegation to ensure the final version of FHA reform passed out of conference committee has as high of a loan limit as possible.

Courtesty of CAR

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Cupertino Market Conditions October 2007

It's in the newspaper again, plastered all over the front page of the San Jose Mercury News:OK '08 seen for Bay Area real estate:LESS IMPACT FROM SUBPRIME LENDING WOES. The article goes on, essentially, to say that the Bay Area is expected to do better than the rest of the country because we suffered less gain during the boom. Because our real estate gained less, it is expected to fall less. Makes sense, but it goes on further to state that our area relied less on sub-prime loans to purchase homes as well.

Perhaps the article is correct and perhaps it is not. But I like to rely on data and facts. Here is data from the past 15 months to give us a snapshot of Cupertino's market. The Single Family market is doing very well, with supply never out-pacing demand by a significant margin. The past year, which was horrible for many areas, was unremarkable for Cupertino.

The condo/townhomes market performed fairly well until the last couple of months, when the demand decreased and supply increased dramatically.

Continued........

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Homebuyers Guide Part 6

Here is an interesting list of who pays for what in Santa Clara County. This ends the series. Hope you found it to be useful.


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Steve Mun, Silicon Valley Realtor
www.stevemun.com

How's the market?

As a Realtor, this is perhaps the question most frequently asked of me. Someone asked me this at a friend's BBQ over this weekend. I had to tell him: "it depends on the specific market, but properties are not moving as quickly as they did the same time last year but prices are not falling as people would expect" was my response. To illustrate this point (and perhaps to give him some supporting data now), here are two areas (Campbell and Cupertino) and how they have been doing recently.

Continued......


Steve Mun, Silicon Valley Realtor
www.stevemun.com

Home Buyer Guide Part 5

Home Buyer's Guide Part 5

The Inspection Process

When you make an offer on a home, your Purchase Contract will likely contain provisions allowing you various inspections of the property. The purpose of these inspections is to educate you as to the physical condition of the property you are purchasing and to provide valuable information to you as a Buyer. It is important to remember that your Purchase Contract may provide for withdrawal from the contract if these reports are unsatisfactory to you, but inspections should not be considered an open door to renegotiate the purchase price.

Structural, Pest Control Inspection:

Often referred to as a "Termite Report," the Structural Pest Control Inspection is conducted by a licensed inspector. In addition to actual damage, the Pest Report will indicate any type of wood destroying organisms that may be present, including Fungi (sometimes called "dry rot"), which generally results from excessive moisture.

Section I Conditions:

Most Pest Reports classify conditions as Section I or Section II items. Section I conditions are those which are "active," currently causing damage to the property. Generally, Section I items need to be corrected before a lender will make a loan on a home.

Section II Conditions:

Those that are not currently causing damage, but are likely to, if left unattended. A typical Section II item is a plumbing leak where the moisture has not yet caused fungus decay.

Who pays?

Your Purchase Contract will specify who is responsible for the cost of the inspection and making these corrections. This is a negotiable item and should be considered carefully. I will advise you as to what is customary and prudent.

Physical Inspection

The Physical Inspection clause in your Purchase Contract, when initialed by both parties, allows you the right to have property thoroughly inspected. This is usually done through a General Home Inspection. While Home Inspectors are not currently required to have a license, most are, or have been, General Contractors. The inspection and the resulting report provide an overall assessment of the present condition of the property.

What gets Inspected?

The Home Inspection covers items such as exterior siding, paint, flooring, appliances, water heater, furnace, electrical service, plumbing, and other visible features of the property. This is a general inspection and will often call for additional inspections by specific trades, such as roof and furnace inspections.

Further Inspections

If conditions warrant, the home inspector may recommend a Structural Engineer's Report. Such a report would identify structural failures and detail recommended corrections.

Who Pays?

Typically, the buyer pays this inspection.

Geological Inspection

You may also elect to have a Geological Inspection to educate yourselves as to the soil conditions at the home you are purchasing. This inspection is performed by a Geotechnical Engineer and involves not only physically inspecting the property, but also researching past geological activity in the area. The primary purpose of Geological Inspection is to determine the stability of the ground under and around the home.

Who Pays?

Typically the Buyer pays, but as with other inspections, this is negotiable according to contract.

Home Warranty

Home Protection Plans are available for purchase by both Buyers and Sellers. Such plans may provide additional protection of certain systems and appliances in your new home. I will provide you with brochures detailing companies and options.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

It's official: we are in a buyer's market.

If you would have asked me a year ago, I would have told you it was not possible. Let me put in a caveat, however: the numbers do not represent all areas, only the county as a whole. Real estate is a micro climate business, so what is happening in your neighborhood does not necessarily reflect what is happening a few mile away in another town. Some areas are still hot and others are doing horribly.

What am I rambling about? It is called absorption rate: it measures the number of months it would take for the current inventory of properties to delete itself. According to NAR, a buyer’s market is represented by 6 months or more of unsold inventory.

Calculating the absorption rate, as I do every month tonight, I realized that we are at a monumental threshold: 5.83 months of supply as of today. This means if you were to put your house on the market today, you would be competing for buyers with 5.83 months of unsold supply of single family homes in Santa Clara County. We are technically in a balanced market and heading towards a buyer’s market at the current pace by next month. Now that’s food for thought for qualified buyers out there.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Home Buyer's Guide Part 4

Our Professional Relationship

Putting me to Work for You

If you see any home that interests you, ask me about it. Whether it is advertised by sign, in the newspaper, listed with another Realtor, or even seen at an Open House, or not even on the market – I am able to best represent you in the pursuit of that property.

If you have any questions about how I work, please ask. Our professional relationship is critical to the successful purchase of your home.

Skilled Service

A large part of my work is performed "behind the scenes;" previewing homes, researching comparable sales, gaining market knowledge, evaluating changing legislation, and maintaining my professional credentials. For every hour spent showing you homes, I have spent up to ten hours preparing. I am constantly acquiring information that will help me to better serve you.

How I am Compensated

I am not paid a substantial salary: I work on commission and I am compensated only when all of your needs have been satisfied and you take ownership of your new home. As the buyer’s agent, my commission will be paid by the seller at close of escrow.

Your Commitment to Me

I will invest substantial time and effort in locating your home, and will represent you with unequalled integrity throughout the purchase of that home. In return, I request your loyalty – a commitment that you will work with me, exclusively, in selecting and purchasing your home.

My Commitment to You

I am a full time professional Realtor, I am educated in the legal aspects of real estate practice and licensed by the State of California to provide real estate services. As a member of both the California and National Associations of Realtor, I abide by a strict Code of Ethics to provide you with the highest level of service. As an associate with Re/Max, I am part of one of strongest and elite networks of real estate professionals in the Bay Area and nationwide. I earn my living by serving the needs of homebuyers and sellers with integrity.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Home Buyer Guide Part 3

Here is a flow chart of the Home Buying Process as discussed previously.

Home Buyer's Guide Part 2

7 Sellers response

I will review the Sellers response with you. My negotiating skills and knowledge will benefit you in reaching a final agreement.

8 Open escrow

When the Purchase Agreement is accepted and signed by all parties your earnest money will be deposited. The escrow and title company will receive and hold your deposit and disburse all funds associated with your transaction.

Continued......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Home Buyer's Guide Part 1

The following material is taken from my Home Buyer’s Guide which I provide to my buyer clients after our initial Buyer Consultation. The purpose is to layout the road map for the journey that we all the ‘home buying process” for the first timers and to refresh or re-acquaint veteran buyers who may have simply been out of the market for a long time. Most of my clients find the material useful and I have yet to encounter anyone who didn’t think it helped them in some way. I wanted to share this material with the readers of my blog in the hopes that it may help them better understand the process. Naturally, if there are any questions, about the material or questions in general, please feel free to contact me.


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Steve Mun, Silicon Valley Realtor
www.stevemun.com

Another bad idea

Another example of a bad move by our local elected officials. The Santa Clara County Supervisors are now considering the prospect of eliminating the effects of Prop 90 here in our county. People who are 55+ will be dramatically affected by this move, making the prospect of downsizing or any type of move to our County prohibitively costly for many who may be facing fixed income situations.

The argument is, of course, the County is losing money in the form of property taxes. However, they fail to take into account that other taxes will take place of this lost revenue stream. These people who move here, may be paying less (not zero) property taxes, but they still have to pay sales and other local taxes don’t they? They buy food, clothes, cars, gasoline, etc….. Picking on the 55+ demographics will probably be a very unfavorable move on the part of the Supervisors.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Home Purchase Assistance Programs

First time home buyers and low income families are suffering the most during this period of credit crunch we are currently experiencing. With some people are having more difficulty now getting loans or down payments to purchase their dream homes, I thought it might be helpful to provide a list of various housing assistance and other loan programs that I am aware of in local cities.

The City of San Jose has different programs, but perhaps the most notable one is the assistance for teachers program.

The City of Campbell has a first time home buyer assistance program.

The City of Santa Clara has a similar program.

The City of Sunnyvale has several assistance programs.

The City of San Mateo has a first time home buyer assistance program.

The City of Menlo Park has PAL.

Acorn Housing provides below market mortgage programs and counseling sessions for those who fall into to low or moderate income levels.

This is not a complete list but should be a good starting point for many.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Increase traffic to your blog

For those of you who are bloggers as well as readers, here is a way to increase traffic to your blog. After all, isn't that why we all write blogs: to increase readership.

BlogRush is a widget which will enable you to get instant distribution of your latest blog post in a distributed network of related blogs. You know.... get your posts to show up on inside those little widgets in the BlogRush network.

You can gain points and be rewarded for your content as well as for your referral of widgets to other bloggers to they can also join the network. It's a great way to increase readers for your blog, in a way that you would be unable to on your own. There's a video that explains everything in detail.

CLICK HERE TO JOIN AND INCREASE READERSHIP.


Steve Mun, Silicon Valley Realtor
www.stevemun.com

Registered Sex Offenders part 2

It’s in the news again today. Registered sex offenders may be forced to move because they live too close to schools or parks.

I wrote recently about parents having the right to know whether registered sex offenders are living in your neighborhood; regretfully, I must say my concerns seem well founded.

Registered sex offenders are prohibited from living within 2000 feet from a school or park: areas where children congregate, according to Jessica’s Law which tracks them. It seems 2,700 registered felons are in violation of this law and are now being forced to relocate.

With 400-700 sexual predators released from prison each month, we must be mindful of the safety of our children. Know who lives in your neighborhood.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Decorating Tools

Ever try to get a visual image of what your house or a room would look like prior to painting it? After all, everyone knows good curb appeal will bring in higher dollars and quicker sales of your home. Color swatches are available but they don’t seem as appealing on actual walls compared to pieces of paper…… You’ve seen computer generated samples at some stores and they seem cool, but it would be nice to do it at the comfort of your own home.

How about trying to decorate your living room with new furniture? How nice it would be to see how certain pieces of furniture would look in your room before you commit to buying them?

Now you can do both of these and other wonderful things by visiting Better Homes and Gardens. Just register yourself and you have access to wonderful tools which will help you decorate your home. This site is a wonderful tool to aid you in your endeavors.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Silicon Valley Market Activities August 2007

CLICK HERE.



Steve Mun, Silicon Valley Realtor
www.stevemun.com

Fight the power

The mortgage interest deduction is being challenged in Congress for homes over 3000 square feet. Were you aware of this fact?

The ability of homeowners to write off their mortgage deduction is the single most powerful incentive to encourage home ownership in the United States. What can be better for the American economy than homeowners contributing to the local economy in the form of property taxes, home improvement projects (i.e. trips to Home Depot, Lowes, the local contractors and sub-contractors, etc…) garden care, and all of the other ancillary services which support this massive industry. The prospect of homeownership for all American is a wonderful dream that gives us all the hope and drives us to become better. Homeowners contribute and pump money into the local economy, which means more jobs get filtered down: the trickle down theory truly at work. The mortgage tax deduction is at the center of this dream and is as American as apple pie and baseball.

However, in the name of reducing global warming, which is a fine idea in my opinion by the way, Congress is about to go overboard once again. True, this proposal will not affect most of us in Silicon Valley as a typical home is not 3000 square feet or larger. However, once this holy grail of property owner rights is challenged, everything else is up for grabs. 3000 square feet or lager is the start of the slippery slope; it will eventually end with the complete elimination of the mortgage interest rate deduction: mark my words.

You may not be aware, but this is not the first time your government attempted to chip away at this particular right. It is being challenged again in a different light; it will be challenged again if this particular proposal is defeated. Once this right is eliminated, the next generation will have even more difficulty affording homes in this area. The affordability index in Silicon Valley is already at a mere 21% (compared to 24% for California and 62% for the nation) as of Q2 2007. This means only 21% of first time homeowners in Santa Clara County can afford to buy a median priced home (which is $800,000 as of July 2007 in Santa Clara County). Taking away a homeowner’s right to write of the interest on their mortgage payments will surely further negatively impact the affordability index, and therefore, reduce ownership to an even worse situation that it is now.

Don’t allow short sighted politicians to take away something as important as this to the local economy and continue to support the effort to encourage home ownership for every American. Homeownership should become easier with successive generations, not more difficult. The government should remove hurdles, not throw them in front of us. Let your Congress-person know you will not support such an effort.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Registered Sexual Offenders

I am a father of a two and a half year old boy. Like all parents, I am concerned about the safety of my Tommy. While channel-surfing a few days ago, I came across re-runs of the Dateline series about sexual predators trying to have sex with children What shocked me about these deviants were they were of all races and religion. I was shocked at some of the “professions” represented by these pedophiles. You truly would not know if your neighbor were a convicted sex offender.

Continued......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

HOA vs. Mello Roos

One of my clients just asked me what is the difference between an HOA and a Mello Roos. Good question, I thought. An interesting topic for the blog…..

An HOA (Home Owner Association fee) is typically associated with CIDs (Common Interest Developments) or types of residences where owners share some space in common. Because there is sharing of common areas (e.g. greenbelts, pool area, tennis courts, laundry facilities, gates around the community, etc…) the collective ownership (association members) will share in the upkeep and maintenance of these areas. This is why the residents will pay HOA dues to the association.

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Steve Mun, Silicon Valley Realtor
www.stevemun.com

Market Activities in Silicon Valley July 2007

Here are the latest sales data straight from our local MLS. A snapshot of the different cities show how sales activity differs from city to city.

Continued......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Evolution of my website

Starting this month, rather than give you pretty graphs and charts, I decided to give you raw data instead on my website. I have always been told that the majority of people are visual and like to see things graphs and charts. It seemed reasonable to me, because I like seeing them as well. However, there is another more important reason for this decision: pursuit of real time data. Now you can see sales related data for every city in both Santa Clara and San Mateo Counties.

Continued.....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Natinonal Home Search

Being associated with a National Company has advantages, and one of those is the ability to do a national search. Through the Re/Max website, the consumer can get access to all the mls' in the nation.


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Steve Mun, Silicon Valley Realtor
www.stevemun.com

Why is the termite report important?

When purchasing a home, buyers look over a mountain of disclosure documents to help them determine if the property is in proper condition and whether to go forward with making an offer or not. One of the documents that gets the most attention is the Structural Pest Control Report or more commonly referred to as the Termite Report. These reports generally identify two types of infestations which can destroy wood: termites and dry rot fungus.

Continued.....

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

New Direction

After more than 4 years at the same brokerage, I finally made my move to a different brokerage. It was time for me. I am no longer a rookie agent who needs the support of a large brokerage with lots of bells and whistles. Naturally, every company has its own positives and negatives; what I needed was to find a company that fit my style and place in my career at this moment.

I wanted a brokerage that had not only regional but national recognition; yet, I also wanted a brokerage that allowed me to run my business like it was my own without too much input on how I ran it. After all, that is one of the reasons I came into Real Estate: to be my own boss. At the end of the day, it is my clients and my work which allow me to feed my family. If I wanted to charge a little less to complete the deal, it should be my call. I wanted a company that was concerned and supportive of its agents more than of its own image.

Continued.....

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

Prop 60 and Prop 90

One of the most frequent questions that an empty nester asks when they make the attempt to down size is the issue of property taxes. Typically, the empty nesters will have lived in their current home for many years and have a very low tax base. When they are ready to downsize, their primary concern is the prospect of a significant increase in their property taxes for a smaller home than the one they are selling. This can be particularly troublesome in fixed income situations.

But not to fear. California, being one of the most expensive places in the nation, had passed certain legislations which will protect folks over 55 and give them a one-time opportunity to take their tax base with them.

Continued......

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

Is it a good time to invest?

When is the best time to invest in real estate? People ask this all the time. The real estate market is no different than any other type of market. You buy when you can get a deal; and you can get a deal, when the supply is greater than demand. When is this perfect market going to come? Well, it is already here in many areas of Santa Clara County.

Granted, I am always the first to tell you to buy in the best area that you can possibly afford; this typically means the areas with the best school districts, in my opinion. However, your rental unit does not necessarily have to have the best school district in order to be in demand, nor be able to build equity as the tenants pay off large portions or most of your mortgage payments. It depends on the amount of money available for down payment to control the monthly payments. After all, it is all about holding onto the property without sinking too much money into it while gaining equity appreciation.

Continued....

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

Homestead exemption

With all of this sub-prime market fiasco, many people are still suffering as the result of their mortgage payments re-adjusting to much higher rates after the teaser rates expired. Those who did not gain much in equity or those who have less than stellar credit history may be watching with less than enthusiasm settling in their hearts.

This brings me to a term which many people may not be familiar with, in my opinion: homestead exemption. This statute provides some protection to the homeowner from debtors trying to force the sale of their primary residence, if there is insufficient equity in the home. If there is sufficient equity in the home, then this exemption will not stop the sale of the residence. The homeowner must make a declaration of homestead on their primary residence.

Continued....

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

Santa Clara County Market Conditions June 2007

Single Family Market

Sales remained flat as we are now entering the summer months; yet look at the increase in homes coming on the market. The inventory minus homes sold were about 4.07:1, hence, the absorption rate approaching 4.10 months in June was extremely accurate. Yes, at the end of June, you would have been up against 4.10 months of unsold inventory of homes to compete against in Santa Clara County if you put your home on the market. That number (unsold inventory) seems to be increasing.

Continued.....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Steve’s Dozen Ways to Bring My Sellers More Money

Steve’s Dozen Ways to Bring My Sellers More Money


1. Cultivate your curb appeal. Some of the best buyers are the most impatient because they need to make a decision fast. If the view of your house from the street turns them off, they might not even stop. Shape up your front yard.
2. Take a critical look at the front of your house. If it’s weathered looking, if anything needs repair, or if anything needs to be hauled to the dump - eliminate these problems. Don’t turn your buyers off outside before the inside can turn them on.
3. Never stay in your house with buyers. Let the agent handle it, and remove yourself. Remember, the agent has worked for many hours with these potential buyers, knows what they are looking for, and how to work with them. Let him or her do the job without interference. You may think an agent isn’t showing the important features of your house, but the agent knows buyers aren’t sold by detail until they’ve become emotionally involved with the big picture of your house. The presence of any member of the seller’s family can’t help, always unnerves possible buyers, and often prevents a sale. Don’t put this obstacle in your path. Leave when buyers are coming, your absence will help sell it.
4. Give your dogs and cats a vacation. They need it and so does your pocketbook. Having pets around (especially aggressive dogs) when you’re selling your home can be incredibly expensive. Many people are acutely uncomfortable around some animals, and simply can’t think buy when their minds are on bye. At least put them in the garage and away from the main area when buyers are coming.
5. A few cans of paint and putty to brighten up your interior are the best investments you can make when you’re selling a house.
6. Drips do more than run up your water bill. They focus the attention of possible buyers on your house’s entire plumbing system, and cause them to worry. Fix these little problems before they cost you a lot more.
7. Squeaking doors and creaking floors, torn or missing screens, cracked glass, and anything in need of repair dampens the house hunter’s enthusiasm. Many buyers believe there will always be ten problems they haven’t noticed for every one they see. Eliminate any negotiation points. A $10 spackle job can easily become a $1,000 negotiation point.
8. Hide (or neatly arrange) everything connected with work: lawnmowers, garden hoses, vacuum cleaners, and all the gear you used to fix up the house. Accent everything connected with play and relaxation; sound systems, skis, toys in the kid’s rooms.
9. De-clutter. Repack compactly, dispose of unneeded items, or rent storage space and move out as much material as you can. You want to create the impression of open space (as much as possible) by removing nearly everything. Minimalist look is the way to go.
10. Adjust the environment. If it’s hot, cool it; if it’s cold, light a crackling fire or turn on the heat.
11. Harmonize the elements. Turn the music on softly and the TV off. Turn on all lights, days or night. Open the drapes in the daytime.
12. You can sell pride of ownership faster and for more money. It’s called cleanliness, and fresh cleanliness has more buyers than used dirt. Put sparkle in your bathrooms and kitchen, and you’ll take out lots more silver.

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Mechanic's Lien and you

A client of mine had his floor refinished after he purchased a house through me. He loved the house and wanted to pull out the carpet from the home and take advantage of the hardwood floor that lay beneath the carpet. This was like many 45 year homes in the valley, beneath the carpet lay a perfectly good hardwood floor which was covered up for probably more than two decades.

I introduce him to my hardwood refinisher who has done excellent work for me in the past for my other clients. But my frugal buyer decides he did not like the price my guy quoted, so he went with someone that he pulled out of craigslist. (It turns out to be a small amount of money by the way).


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Steve Mun, Silicon Valley Realtor
www.stevemun.com

Neighborhood values

Sue McAllister's blog called Square Feet about real estate in the Mercury News posted some interesting statistics that she gathered about sales activity from various neighborhoods in Santa Clara County. This confirms what I have been saying in the past about buying in neighborhoods with great schools being better buys because they will be easier to sell later. The statistics are a bit skewed, because she lumped many different areas together, but it gives the reader a general idea about the sales activity in different areas of the county. What she is trying to do is calculate absorption rates for different communities.

Continued.....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Low Ball Offers.....

We all want a good deal in anything we purchase: this is a universal desire in all of us seek out value in whatever we set out to buy. I certainly understand; who doesn't want a good deal? I am just puzzled; however, by the way certain people attempt to achieve this value acquisition. I try to explain to my buyers, especially the first timers; the best way to negotiate for a house is not to low ball. See the photo above? You don't want to start the negotiation with that move.....

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Steve Mun, Silicon Valley Realtor
www.stevemun.com

Heard on the street......

I am like probably many people: I like to read about ridiculous and extreme things. These things keep me entertained, and helps me keep things in proper perspective. That is why I keep writing about these extreme items of over bidding.

Palo Alto has always been the bellwether for real estate industry in Silicon Valley. What happens in Palo Alto seems to trickle down to other areas. This always been - my senior colleagues tell me - and as far as I can see, will always be. Multiple offers is the norm in Palo Alto, period. Check out the graphs below and tell me if I you question my opinion.

Continued....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Campbell Market Conditions May 2007

Single Family Market

The sales related activity in Campbell seems to be following the county trend: almost a flat line. Inventory is increasing as we hit the summer months, while the sales related activity seems remain fairly flat for the past 15 months (except for a slight upwardly trend in the past 3 months). No significant ups and downs like the previous 15 months.

Continued......

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

Santa Clara County Market Conditions May 07

Single Family Market

The Absorption Rate above shows that the inventory in Santa Clara County as a whole, is increasing. As we are hitting the summer months, the inventory for sale is increasing as expected. Kids will be out of school soon, so people are putting their homes on the market and will do so throughout the summer season; the momentum will typically carry into September.

What is a bit different is that the number of homes going into contract is not keeping pace with what was happening the same time the previous year. The comparison of the two sets of charts show that the sales related activity has been pretty flat for the past 15 months.

Continued.....

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

To inspect or not to inspect.....

"Who pays for the inspections?" My starry eyed first time homebuyer asked me.

"It depends on the customary practices of the area." I replied.

"In Sunnyvale, and other parts of Northern Santa Clara County and up the peninsula, sellers will typically pay to have: 1) termite, 2) property, 3) roof and 4) sometimes chimney reports ordered and made available so that the buyers will have the opportunity to see the condition of the home before making an offer."

Continued....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

$8,000 lesson

Those damned late night infomercials..... They lead perfectly intelligent people to believe that with no money down or for a few thousand dollars, they can buy homes of people who defaulted on their mortgage payments.

I had a prospect who saw a late night infomercial from a "national figure", called up the number and got talked into signing up for a "coaching program" for some $8,000 which would reveal the secrets of buying real estate with no money down. Turned out they were talking about some variation of buying foreclosed properties at a trustee's sale (auction). This "coach" suggested financing the purchase by using credit card debt!

Continued......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Growing Pain.....

Ah, first time home buyers. I love them! I love them because they are starry eyed and full of excitement about getting into their first dream home. I get more pleasure out of getting them into their first home and living vicariously through them in their moments of joy. This is what gives me the most satisfaction and pleasure about my profession!

Because they are rookies in the game, I try to spare them some disappointment and pain by showing them the shortcut - so to speak - in their journey offering them advice which would serve them well. But, alas, they insist on making the full journey, including walking through the minefield of rejection on their own, when I was clearly standing there pointing them to the painless walkway that lay above the minefield. Most first time home buyers must experience growing pain.

Continued.....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

On Memorial Day

Today is Memorial Day. A day associated with barbeque's and being outdoors in the sun with family and friends taking a day off to enjoy the coming of summer. This is great kickoff to summer.

But let us take a moment and remember what we are celebrating today. It is a day of celebrating those brave men and women in the armed services who made the ultimate sacrifice in preserving our freedom. I don't want to be too somber, but I think it only appropriate to take a moment and send our prayers to those brave men and women in Iraq and Afghanistan who are making sacrifices being away from their families and loved ones so that we can enjoy our day of hot dogs and cokes. Pray that they be safe and that they return to their loved ones unharmed and soon so that they too can celebrate with us on Memorial Day 2008.

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

We're #1 again.......

I know, I know....silly title, but an accurate statement, nonetheless. What am I referring to? The most recent Best in Silicon Valley poll from the San Jose Mercury News came out this morning and our company, Alain Pinel Realtors came out #1 in both categories they measured for Real Estate Brokerages: #1 in Full Service Broker and #1 in Broker for Luxury Homes. A clean sweep, so I had to mention it. We swept both categories last year as well.

Continued....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Heard on the street

This is a follow up to the previous Heard on the Street post.

This little gem received 13 offers after only being on the market for 8 days. It was listed at $789,000 (consistent with the selling prices in the area) and sold for $858,000 or 9% over list!


Continued.....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Cupertino Market Conditions April 2007

Single Family Market


We can officially say that market condition in Cupertino is HOT! Yes, that's a technical term.
:-)

The only place that is hotter is Palo Alto. Market conditions in Cupertino and a few other areas are drastically different than other areas in Silicon Valley. It's almost as if saying, market correction: where? If you've been reading this blog, this news should come as no surprise to you. Let's just look at what has been happening since January of this year. In a majority of areas in the Valley, sellers are worried because inventory is increasing and buyers are more selective and taking their time to make choices: a new experience for many (see Santa Clara County and Campbell). Not here, however. You still have to move quickly and pay over asking if you want to move into this city. There is simply no inventory to speak of! The market condition is worse for buyers now then it was a year earlier, with respect to competition and price!

Continued......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Santa Clara County Market Conditions April 2007

Single Family Market

The disparity between the number of homes coming on the market and the homes selling continues to grow as we approach the summer months. Clearly, the number of homes sold is lower this year compared to last. The fascinating thing is that despite this disparity and the lower sales numbers, the prices are continuing to rise as we will see (one would expect the opposite). What does this tell us? Buyers certainly have a wider selection of properties from which to choose overall, however, there is still competition for the ‘prime choice' properties in great condition and excellent school districts. Location becomes extremely important in this market place. Again, depends on where your home is located.....


Continue....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Santa Clara County Market Conditions April 2007

Single Family Market

The disparity between the number of homes coming on the market and the homes selling continues to grow as we approach the summer months. Clearly, the number of homes sold is lower this year compared to last. The fascinating thing is that despite this disparity and the lower sales numbers, the prices are continuing to rise as we will see (one would expect the opposite). What does this tell us? Buyers certainly have a wider selection of properties from which to choose overall, however, there is still competition for the ‘prime choice' properties in great condition and excellent school districts. Location becomes extremely important in this market place. Again, depends on where your home is located.....


Continue....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Location, location, location.....

I have always believed in buying in the best area that you can afford (meaning areas that are centrally located and with great school districts). I know, this is not an original idea but it is true: location, location, location! Why should you choose a home in this type of location rather than a more "affordable" area? Because it is a better value in the long run. You will have an easier time selling it later and will earn more money.

Let me illustrate this truism for you in the current market. I will take two areas that are the extreme opposite poles in terms of location and price. I will provide the data, so you decide which is a better "value" in the end.

Morgan Hill/Gilroy vs. Cupertino

Continued......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Consultant or thief?

It is sad, but it has finally happened, a potential client was referred to me who has clearly been deceived and mistreated by a mortgage professional whose job was supposed to provide them with the best product to fit their needs. Unfortunately, we read about this type of thing in the newspapers but sometimes we get to face them in person.

This particular client was given a Negative Amortization Loan or an Option ARM Loan but the details and the pitfalls were not fully explained to them. Option ARM was not designed for a regular salaried worker like this prospective client; it was designed more for business owners or commissioned employee like Realtors who may come into large sums of money or may have stretches with no income.

Consumers sometime have no idea what they are being driven to, so one safeguard would be to ask the Realtor to see if this type of loan would be suitable for them. In this case, that avenue was unavailable as the Realtor was the person also doing the loan and pushing it. This Realtor was making money off this client on the loan side as well as the sales side; there was no reason to sell them a product and not explain about the possibility the mortgage would increase rather than decrease with time: their income would not increase drastically over time. The only explanation for this in my opinion is pure greed: typically, these loans pay out larger fees to loan brokers than other types of loan products out there.

What transpired was they paid the minimum payment option, so they were not even paying enough to cover the interest. Over the course of two years, their mortgage balance was not decreasing, but increasing to the point where they may be unable to make the inflated monthly payments. Now the prospective client is faced with a dilemma, not necessarily of their choosing: try to re-finance or sell their current home and buy something that is more affordable and hopefully will appreciate in value to cover any losses they may have suffered thus far. (Unfortunately they bought in an area that has not appreciated in value over two years so not only do they owe more, their property is worth about the same).

Consumers, please be careful out there. As we have learned over and over again, there are unscrupulous people out there who are not in this wonderful business for the long run. They are willing to earn money quickly at the risk of their clients and do not abide by their fiduciary duties to their clients. Ask questions until you understand. Don’t be afraid or embarrassed to ask questions, we are dealing with highly technical financial concepts that many in the industry sometimes don’t understand. At the end of the day, you have to know what you are getting yourself into.


Steve Mun, Silicon Valley Realtor
www.stevemun.com

Heard on the street......

It sounds so simple, and it works time and time again, when applied correctly: price the home correctly and it will sell quickly. Of course, the house has to be in good condition. But even if the house is not in tip-top condition, pricing it accordingly will make it move.

Here is another example of a nice home that was priced correctly and resulted in multiple offers. This little gem is located near Primary Plus Day Care Center in the Campbell district of San Jose. The house is a normal sized 3 beds 2 bath with a little over 1700 sq. ft. of living space on a 7400 sq. ft. lot (the lot size in this area is a little larger compared to other neighborhoods) for a 49 year old home and it was priced at $789,000. The house was in good condition with granite counter upgrades in the kitchen and nicely refinished hardwood on the floor.

The owners decided to wait a week before taking offers. The offers were accepted this afternoon. 13 offers came in; obviously it went over list price. I will reveal the price when escrow closes and the price becomes public record. Tune in……

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Cupertino Market Conditions 03 07

Single Family Market

Market conditions in Cupertino is drastically different than other cities in the area. Nowhere is this more evident than in the performance in the past three months. While everywhere else, inventory is outpacing sales on any given month (see Campbell and Santa Clara County), this city is actually seeing a reverse: decrease in inventory and increase in sales! In both February and March of 07, sales activity outpaced the listing activity. In the past two months, there was actually a shortage of housing (see story). The inventory from the summer months should be absorbed very soon.

Given it’s higher price-point, the whole sub-prime market hysteria had practically no impact in this city.

Continue.....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Campbell Market Conditions 03 07

Single Family Market

The market seems to be reacting predictably compared to last month. Coming from increased listing activities and flat sales activities through the past summer and winter months, we are entering the upswing into the spring and summer season. There is no appreciable difference between March 06 and 07 in the area of homes going into contract (pending). That is quite surprising, considering all of the brouhaha about the collapse of the sub-prime lending market we all have heard so much about in the past few months. I suppose that is a testament to Silicon Valley's belief in its robust economy and the shortage of housing.

Continue......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Santa Clara County Market Conditions 03 07

Single Family Market

There certainly is not a shortage of homes coming on the market in Santa Clara County right now. The number of homes coming on the market continues to be greater in volume when compared to the same period last year: a glaring difference. Also, the purchasing activity did not kick into overdrive, but remained flat during the busy months (February through September). This is most likely the result of the sub-prime borrowers who were unable to keep up with their mortgage payments unloading their homes before going into default.

If we look at the past three months, surprisingly, there was no huge drop in the number of homes going into contract (pending) given all of the negative publicity of the sub-prime market (perhaps a reflection of the robust economy in the region). It will be interesting to see how we perform during the summer months.

Continue.....

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Heard on the street

I wrote about a house in Santa Clara with Cupertino Schools that received 42 offers a few weeks back. It was an average house, nothing special, on a semi-busy street and it did have an extra large lot, but mostly in original condition.

Continue......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Bay Area Bargains

A 15,000 sq. ft., 6 story, 25 room townhouse in Manhattan is currently on the market for $59 Million. Apparently it has been on the market for several months. This famous mansion was once owned by Bob Guccione, the publisher of Penthouse magazine. After defaulting on loans, he lost his residence to the bank. What do you think his mortgage payment was on that puppy?

Continued.......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Heard on the street

The jokes we used to make to each other when I started in the business in 2001 was that soon every 3 bedroom 2 baths would cost a $1 Million dollars and we would all be out of business, because no one would buy homes. It was supposed to be ironic.

The good thing is we are not all out of business. Most of the colleagues with whom I started in the business are still here and doing well, thank goodness. The not so good and not so ironic news is that yes, the typical 3/2 house has hit a $ 1 MILLION DOLLARS! Hard to believe, isn’t it? But it is true, here in the north western corner of Silicon Valley better known as Cupertino.

Continue......

Steve Mun, Silicon Valley Realtor
www.stevemun.com

Not too shabby.....

I was doing my Open House Sunday, when an elderly gentleman walked in saying he wanted to check out how the prices of homes were doing in the neighborhood. He was an original owner in the tract. He paid $17,500 for his 3 bed 2 bath unit 52 years ago. He is a very nice grandfatherly gentleman who apparently enjoyed watching the gasps and jaw dropping responses emanating from me (hopefully I wasn't drooling too). He said he could not afford the $17,500, on his Veteran's loan so he had to borrow more to make the purchase. He said he and his wife though they was getting in way over their heads. Sound familiar? It seems like every single first time buyer of mine repeats this sentiment.

He told me that there were possibly 3 original owners left in the tract. He just got through paying the second installment of his property tax and he paid a little over $700. Less than $1,400 a year in property taxes! This was all very interesting to me because you don't get to meet original owners very often in 50 year old neighborhoos.

His house is off Quito near Clemson in Saratoga. The same unit that he owns is now on the market for $1,179,000! By my calculation, his house is now worth approximately 68 times what he paid 52 years ago! Not too shabby.....

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

The Art of the Deal

I was communicating with a client who has been "gauging" the market by sitting on the sideline and just watching for nearly a year. He just wrote to me asking about the impact of the sub-prime market on the local market. In responding to him, I asked him a question about his plan, since we hadn't communicated in a while.

My response was edited to leave out personal detail.

Buyer:

I've been hearing a lot about the "crisis" with the sub-prime lenders/borrowers... has that started to effect the market yet? Negatively? Positively? I haven't seen any prices going down recently or a real flurry of activities; just a lot of panic. Any feedback you can provide would be appreciated.

Silicon Valley Realtor:

..... I know you are trying to gauge the market and figure out when is the best time to buy. The answer to when is the best time and how do you get a deal? Depends on your plan.......

Let's take an example from your world. Which customer gets the best overall deal? A customer who comes in with no formal plan and just asks about prices of piecemeal step motors and controllers every few months without giving you a plan of what he is trying to accomplish? Or a customer who has a written plan with all the details, including time frame, drawings, and budget showing what he is trying to accomplish? With all that information aren't you even able to provide solutions that the customer did not even consider?

What is your plan?.....

After I sent out the response, I realized my buyer was not alone in his thinking, there are many people out there who want to buy a home and are trying to gauge the market, but have no plan set up to facilitate a good deal. Buyers think they can simply wait and jump in any time when a "deal" accidentally falls into their lap. They want to benefit without doing any of the prep work in the form of a plan. Unfortunately, that is not how good deals are found in the real estate marketplace. Far from it: No pain, no gain.

Let's use another analogy: Do you go on vacation without a plan? Does simply trying to "wing it" make sense in this situation? Hoping you will get a great deal on plane fare and then hope to get a great deal on hotel when you get to wherever you my end up; and then again hoping to get a great deal on the return fare? How enjoyable, relaxing and full of value will that vacation be?

Great deals do not simply fall into a buyer's lap by accident (even if they did, the buyer with no plan will be unable to respond in time). Deals happen as a direct result of well thought out plans. This is especially true in the real estate market, they are the by products of a well thought out plan which takes into consideration 1) timing, 2) finances, 3) market conditions and 4) seller situations. The amalgamation of these elements, results in a unique situation for each property, or the so called "deal." A buyer must be fully prepared to react if a "deal" comes his/her way; they cannot hope to delay the deal until they get their act together; it will have simply passed them by. The next buyer in line who was prepared with a plan will be the beneficiary of that deal.

What have we learned? Real Estate market is no different than any other industry or market. The people who benefit the most are the same people who are well prepared with plans. If a buyer wants a real estate deal in Silicon Valley, they must be fully prepared with a plan and be able to react. Remember, there are many engineering and technocrat types who have their plans laid out and are waiting on the sidelines ready to pounce. Who do you think has a better chance of facilitating the deal?

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

2nd installment of property taxes due by April 10!

Reminder for everyone.

Please remember that the 2nd installment of your property taxes is due by April 10. If you pay after the aforementioned date, you will incur penalties, so please make sure you take care of this matter, if you have no done so already. Who wants to pay penalties?
For those of you living in Santa Clara County, if you have any questions, you may contact the County Tax Assessor's office.

Steve Mun, Silicon Valley Realtor
http://www.stevemun.com/

1031 Deferred Exchange

Everyone wants to make money. How do investors make money in Real Estate? By using the power of leverage! Best ways to make money are 1) deferring payment of taxes on your capital gain and 2) taking said tax-deferred money and re-investing it into a larger or more properties, so you can further leverage to gain equity. This is what is known as a 1031 (IRS code) Deferred Exchange.

As the property is an investment property and not your primary residence, you cannot avoid paying taxes on your gain. However, because you are able to utilize this IRS code, you can defer (not avoid) paying taxes over and over until you decide at some point to cash out.

There are four basic requirements (simplified for explanatory purposes) to keep in mind when doing a 1031 exchange:

1. Like kind property/ies – the property that you want to next acquire with the proceeds from the sale must be of ‘like kind” meaning it/they should be used for the same purpose. Hence, all real estate (within the U.S.) fall into the “like kind” category.
2. Timeline – there is a requirement that the purchase of the next property/ies must be completed within 180 days from the sale of the original property.
3. Identification Rule – within 45 days of selling the original property, you must identify 3 properties of any price within the U.S. (of which you must purchase at least one) then complete the purchase by the end of the 180 days.
4. 100 % tax deferral – to get the full deferral, two requirements must be met:
a. Reinvestment - all of the cash generated from the sale must be reinvested into the like kind property.
b. New property must be equal to or greater in value than the property just sold.

The key to remember here is utilizing the power of leverage. The money that you would have to turn over to the IRS as capital gains tax is being reinvested and further leveraged to increase your purchasing power.


Let’s see this in action.


Investor A sells his investment property and received $800,000 for the sale. He will pay his capital gains tax (45% [both state and federal] for purposes of simplicity) and be left with $440,000 which he then can use to acquire another piece of property. Requiring 20% down to acquire another property, he can leverage his $440,000 and at most, purchase a property worth $2,200,000.

Investor B sells his investment property and received $800,000 for the sale. He decides to do a 1031 exchange, so he does not touch any of the proceeds and reinvests the entire $800,000. Using $800,000 as a down payment, he can acquire two properties at $2,000,000 each or $4,000,000 in total.

By utilizing the 1031 exchange, Investor B was able to purchase $1,800,000 more in property, starting with the same $800,000 in proceeds. Imagine the next exchange; Investor B can easily purchase 4 properties from the sale of his 2 properties.

Get the idea about how much more property an investor can acquire by deferring the capital gains tax?

To learn more in detail about 1031 Exchanges, please contact me.


Steve Mun, Silicon Valley Realtor
www.stevemun.com