Fabulous Deal in Downtown San Jose near JapanTown. 3 bedroom, 1 bath main home with great guest cottage, granny unit, ADU, rental property.

11-02-09

The Seattle City Council voted this afternoon to allow so-called “backyard cottages,” which have been permitted in Southeast Seattle as a pilot project, to be built around the city – with one big change – they were going to issue only 50 permits per year, but now there’s no cap. Read the announcement here:

The Council today adopted legislation to allow the construction of backyard cottages on eligible lots in single-family zones throughout the city. Backyard cottages also referred to as “detached accessory dwelling units,” have been permitted in Southeast Seattle since 2006, and approximately 20 have been constructed since that time.

“This is a smart and modest step to create affordable housing options, help someone pay their mortgage, get older on their property, or to make a room for a son or daughter moving back home,” said Councilmember Sally J. Clark.

Posted by Scott Poncetta

1.  Buyers can consider the reported conditions of the home’s systems to determine their ability to afford to maintain the property.  A home with a 12 year old water heater, an 18 year old furnace and a 25 year old composite shingled roof is going to need some costly investments in the near future.

2.  Buyers can sometimes use information regarding undisclosed defects to negotiate the seller’s action to repair the defect(s) or adjust the asking price for the home.

3.  Sellers can obtain a home inspection and use the report to disclose known defects to potential buyers.

4.  Sellers can obtain a home inspection and use the report to identify and correct significant defects that could interfere with a buyer’s desire to submit a contract to buy the property.

5.  Buyers can use the inspection report as a “punch list” or “to do list” for maintaining the property after purchase.

6.  Buyers/Sellers can use the report to communicate to contractors the nature of the defect(s) to obtain estimates for repair or to arrange for repairs or replacements.

7.  Buyers can sometimes use the inspection report as a means to withdraw from the contracted agreement to purchase the home when certain types of undisclosed defects are reported.

Buyers and sellers should consider obtaining inspection reports only from professional full-time home inspectors.  Inspection reports generated by builders or contractors are often used by them as marketing tools and a means to generate business for maintenance and repairs and do not always represent the actual conditions of the property.

I know every buyer out there is trying to time the absolute bottom of the real estate market. It’s human nature and clearly pragmatic, buy low and sell high, right? Well, I’m running into some situations where I am not so sure that trying to time the bottom is so obviously smart or in our best interest. Here is why:

I have this one smart client that wants to buy a second home. Yesterday he quizzed me on whether or not I think the market will continue to fall over the next few months. That’s a hard question to answer in these volatile times and is definitely market specific. In his case, I believe we are either at the bottom now or awfully close. However, after thinking about it i think the question of whether or not i believe interest rates will go up is just as or more relevant. His primary concern is the bottom line monthly payment and whether or not it’s going to strap him. His price range is $800k but he could qualify for more. He really likes a house for $850k but is concerned about moving above his comfort zone. Below is what i wrote to him yesterday morning.

Here is what it means to him assuming a 20% down payment.

If you were to get a loan at 5% your payment (interest and principal) would be the following:

$800k purchase price =   $3,200
$850k purchase price =   $3,400

If mortgage rates go up 1 percentage point to 6%

$800k purchase price = $3,840
$850k purchase price = $4,080

To follow up on our conversation from this morning, most people don’t realize how much a 1 pt change in rates affects the payment. Everyone is trying to time the bottom of the market but timing the interest rate bottom is just as important to the bottom line monthly payment which tends to be what concerns people most. So let’s say you are waiting for the bottom and you are hoping that a given property drops another $50k … and it does to $800k. But at the same time the rates jump 1 percentage point. The home you could have bought for $850 and would have cost you $3,400 per month, now at $800k costs you $3,840 per month.

So the question is… what is more likely, home values go down or interest rates go up? What happens if property values hold or even go up and the interest rate jumps a point? What happens if it jumps 2 points? Most people will find themselves priced out of the market.

My personal opinion is that rates are going to go up. It’s not a matter of whether it’s going to happen but when.

Timing the bottom of the market won’t always save you money.

Here is a link to an article out today that talks about how mortgage rates are likely to go up, stating that they’ve already gone up a half a point since beginning of Oct.

http://themortgagereports.com/2009/10/gas-prices-mortgage-rates.html?awesm=fbshare.me_O88

Is it a Good Time To Buy a Home?
Understanding the current real estate market with its many variables is a complicated task and predicting it an even greater challenge. However, if you are someone you know is considering buying, I’m a strong advocate of purchasing in the fall for one simple reason, LEVERAGE. Sellers know that if they don’t sell their homes before mid November, it is very unlikely that it won’t sell until February or later the following year. This makes sellers much more willing to accept low priced offers this time of year, and an excellent opportunity for would be buyers.

Have we hit the bottom?
You never really know until it’s in the rearview mirror, but there are many signs that we are currently at the bottom or have already passed it. I’m on the streets everyday and we are seeing multiple offers again on most homes priced below $600,000. With three years in a row of low transaction volume there is a huge amount of pent up demand, especially in the first time buyer market.

Home pricing indicators usually trend upward from the bottom. Historically, when the lower end markets become competitive and we experience average pricing gains, it will trickle up and begin to affect the next sectors in a similar way.

So, is it a good time to buy a home?
It depends. If you are a first time buyer or investor interested in buying in the below $700k range, the answer is absolutely YES (right now)!  If you are considering selling a lower priced home and moving up, YES, because you will sell in a competitive market and have leverage in a higher priced market. If you are downsizing, the answer is NO. And if you are considering making a lateral move or buying a mid to higher priced home the answer is maybe, because the decision is micro-market specific. Call me first to discuss.

Also consider these factors when contemplating buying now:
-    Historically low interest rates (most borrowers qualify at around 5%)
-    $8,000 tax credit to first time buyers (Ends December 1st)
-    Consumer confidence index is on the rise
-    Prices on the rise. Month over month over month gains in SCC home prices
-    Affordability! 2003 prices now, but creeping up.

I love when i get the opportunity to see this woman speak! Last week I caught one of her presentations in our Saratoga offices and was able to get a short clip to share with my blog readers/viewers.

Carole Rodoni is a highly regarded speaker, author and advisor in the Bay Area Real Estate Industry. Formerly President of Fox & Carskadon Realtors, COO of Cornish and Carey Real Estate, President and COO of Alain Pinel Realtors, and now the President of her own consulting firm, Bamboo Consulting. She writes for the Wallstreet Journal and has been a speaker and consultant for First American Title Company for many years.

Check it out! It’s only a minute and a half.

SEPTEMBER, OCTOBER, NOVEMBER…. Sellers ready to make a deal!

Understanding the real estate market with its many variables is a complicated task and predicting it an even greater challenge. However, in any market I’m a strong advocate of buying a home in the fall for one simple reason, LEVERAGE. Sellers know that if they don’t sell their homes before mid November, it is very unlikely that it won’t sell until February or later the following year. This makes them much more willing to accept low priced offers this time of year, and an excellent opportunity for would be buyers.

If you are a first time buyer or investor interested in buying in the below $700k range, the answer is absolutely YES (right now)!  If you are considering selling a lower priced home and moving up, YES, because you will sell in a competitive market and have leverage in a higher priced market. If looking for a high priced home, YES, because you have a lot to choose from and negotiating position. If you are downsizing, the answer is NO.

Also consider these factors when contemplating buying now:
-    Historically low interest rates (most borrowers qualify at around 5%)
-    $8,000 tax credit to first time buyers (Ends December 1st)
-    Consumer confidence index is on the rise
-    Prices on the rise. Month over month over month gains in SCC home prices
-    Affordability! 2003 prices now, but creeping up.

Do you know anyone that might be interested in buying a home?
If yes, please have them contact me. Feel free to contact me anytime to discuss your individual situation or current market conditions.

This was a fabulous investment choice for first time investors I met at one of my “Benefits of Buying a Home with a Second Unit” seminars. This duplex sold only 3 years ago in the mid $800,000s and will close next week somewhere in the $500′s. After putting 20% down and an estimated $10,000 in repairs, this property will cash flow for them immediately.

Check out this short clip of me showing off the latest sale.

Asking $539,000

Every once in awhile I run across what i consider a true deal. Someone needs to benefit from this one.

It’s in Scott’s Valley about 3 mins from Granite Creek Exit, 10 mins from downtown Santa Cruz, and 20 mins from downtown Los Gatos.

The main home is a remodeled 2 bed, 1 bath. Good sized, nice kitchen and oversized master bedroom.

Below it is a very rentable 1 bedroom apt. (estimated $1,000 income)

There is a third structure that is a bedroom, full bath, and washer/dryer. This could either be another rental (adding kitchenette), home office, guest house for friends, or separate bedroom for child.

It’s all on 1/3 acre with a great setting at the end of quiet cul-de-sac. It also has a great deck and a jacuzzi.

Asking price is $539,000 but i think could be picked up for around $520,000 +/-

With the estimated rental income, it would be the monthly equivalent of buying a home for $300,000 and about $1,300 per month after tax benefit (see attachment). This is WITHOUT renting the detached unit. If you wanted to add a small kitchenette ($5k max) and rent that too, it would go for another $700 per month, making this crazy affordable. There is a small christian college just down the street so finding renters would never be an issue.

Here is a link to the listing if you want to learn more.

http://www.redfin.com/CA/Scotts-Valley/1025-Bethany-Dr-95066/home/2231202

Call or email me if you or anyone you know might be looking for something like this – or please forward it on. I make this commute everyday. It isn’t bad and i love being 10 mins from ocean.