Silicon Valley Real Estate

650-619-9285

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@marcyagent

What Do Higher Interest Rates Mean For Silicon Valley Real Estate

After the election I started watching Bloomberg TV instead of the news/opinion channels I had been watching. I guess I just got tired of all the yelling, in addition to the fact that I felt the need to try and get some clarity on what might happen to the economy, and more specifically the Silicon Valley housing market.

Besides the much needed civility I found on Bloomberg, I quickly came away with the understanding that no matter who the different reporters and commentators said they thought would be winners and losers in a new political environment, there was one thing everyone agreed on. Interest rates are going up. PERIOD, end of story. Janet Yellen was going to raise interest rates anyway, due to the favorable economic environment. But added to what would have happened, regardless of the election outcome, everyone agrees that we appear to be headed for an inflationary period.

I am old enough to have purchased my first home when interest rates were 19% and the most valuable homes were those that had assumable mortgages as 13% or less. Hopefully we are not going back to those days.

But we are going from interest rates in low 3% to now over 4% and presumably still rising. So what does this mean to the Silicon Valley housing market?

Common wisdom is that as interest rates go up housing prices go down since the ability for a borrower to pay also goes down. We have seen this in the past, but the decrease in price is not always proportional to the increase in rate.

Take this example.

A Million dollar loan: 30 year fixed

At 4.150%: $4861 a month

At 5%: $5368

At 6%: $5996

At 7%: $6653

The difference for each jump of 1% in interest translates into about a 10% increase in monthly payment.

For a conforming loan of $400,000 30 year fixed

At 4%: 1910

At 5%: 2147

At 6%: 2398

At 7%: 2661

Again, the difference for each 1% in increased interest rates equates to about a 10% increase in monthly payment.

So, in order to make waiting a money saver, If interest rates go up 1% pt. housing prices must go down over 10%. At a 2% pt hike housing prices must go down over 20%, and at a 3 pt climb they must go down over 30%.

Do we expect this to happen in the Silicon Valley housing market in the near future?

No one can say for sure, but let’s look back at housing rate drops during the big crash of 2008-2010/2011 in some different neighborhoods.

These are average prices for all residential real estate. Some segments fell more than others, but on average I looked at what the mean sale was for single family homes, town homes and condos in four locations: Palo Alto, East Palo Alto, 94087 (Sunnyvale west of El Camino), and Willow Glen.

Palo Alto:

High before crash: $1.3 million

Low after crash $1.2 million

East Palo Alto

High before crash: $628,000

Low after crash: $295,000

94087

High before crash: $779,000

Low after crash: $717,000

Willow Glen:

High Before crash: $793,000

Low after crash: $637,000

What so these numbers tell me about the Silicon Valley housing market, and by extension you?

If you are planning on buying in one of the areas where prices held up fairly well during the crash, then waiting for prices to drop as interest rates rise may not be to your advantage.

If you are planning on buying in a location that did not hold up well during the crash then an increase in interest rates may get you some savings in the long run or maybe bigger, better property.

My only concern would be that places like East Palo Alto that suffered so badly during the crash may not drop as much with higher interest rates since the location is so convenient to Facebook and Google. That may put enough pressure on these east of 101 neighborhoods to keep the prices supported more than they were in the crash.

I believe the same may be true in San Jose as companies like Google and Apple move south where there is more available space. In neighborhoods like Alum Rock or South San Jose where there is a lot of investor activity it may be better to wait until prices fall.

If you have any questions about buying or selling a home in the Silicon Valley please feel free to contact me.

What Does an Administrator Of A Redwood City Probate Estate Do With An Offer Unlikely to Close?

In a Redwood City Probate sale, sometimes the highest offer turns out not to be the best offer, but until it does not close, it is impossible to know that. So what do you do if you are the Administrator of a Redwood City Probate Estate and you are faced with very different competing offersrs.

There is not one right answer, but here is an example and some things to keep in mind when making your decision. Remember the guiding principle here is that I am making the assumption that you have full authority to sell the home and court confirmation is not mandatory. If the sale has to be confirmed by the Probate court then this blog does not apply to you. The Administrator of the Redwood City Probate Estate with full authority gets to make the decision as to which offer is accepted, but that decision must be sent to all the heirs of the estate in a Notice of Proposed Action. If any heirs object, the sale may have to go to Probate Court for confirmation and an over bid process which will cause months of delay.

The Administrator of the Redwood City Probate Estate is charged with getting the best price and best terms for the house for the heirs to the estate. Best price is easy to determine, best price is not.

Take an example of what happened in one of my Probate listings in Redwood City.

I was hired to sell a home in Probate in Redwood City. The home had major cracks in the walls, a broken heater, bad plumbing, broken windows, major floor slopes, a garage that was leaning, and the house basically looked like it was being held up by termites holding hands.

The Probate Court sent out a Probate Referee who said the value of the house was $575,000.

The Administrator of the Redwood City Probate Estate hired me to sell the house. I suggested getting inspections. The foundation inspector said the foundation was no good and would cost ninety thousand dollars to replace.

We decided to list the house at $650,000 because the market was rapidly appreciating and the house had a lot of charm and a great location even though it needed so much work. Other homes in the neighborhood were selling in the $800-$900,000 range.

The seller received 3 offers for the Redwood City Probate home.

$650,000 As Is, no property contingency, 14 day loan contingency.
$600,000 As Is All cash, no inspections or contingencies of any kind, close as soon as the heirs sign a Notice of Proposed Action.
$800,000, All Cash, No appraisal contingency, 5 day property contingency.

This $800,000 offer seemed too good to be true. I told the seller that with a 5 day property inspection I expected the buyer would come back and try to re negotiate the price even though all the inspections were done and we knew very little, if anything could be salvaged. At that point if the price was over $600,000 then it was worth the risk.

It was also possible the buyer had never seen the house, had no idea what he was doing, and was making high ball contingent offers on many properties with the hope someone would take his offer and then he could decide if he wanted the property. He was as likely to cancel the contract as not.

The Administrator of this Redwood City Probate Estate decided she had to take a chance on the $800,000 offer. She knew it was a long shot, but if she did not accept it the other heirs could accuse her of not taking the best offer for the estate because she was in a hurry to close escrow and get her money. She knew that for them the higher price was worth it even if they had to wait longer.

So the highest offer was accepted and 4 days later the contract was cancelled. The buyer discovered how much work needed to be done, despite supposedly reading all the reports, and dropped out.

The offer for $600,000 was then accepted as the buyers were still interested and closed escrow 14 days later.

The heirs all agreed that they gave it a shot at getting more than the house was worth, and were willing to take market value for the house.

So, if you are an Administrator of a Probate Estate sometimes the highest price offer may not seem like it will close, but taking a chance on it can be the best thing for the estate, and if it does not work out at least you have fulfilled your fiduciary duty.

Marcy Moyer

Keller Williams Realty

650-619-9285

Do You Have Right To Sell That Half Moon Bay Probate Home Part 3

As a realtor who specializes in Probate sales I have recently been involved with a number of families were trying to sell homes they thought they inherited or had title to, but wound up in Probate instead. Since the Probate courts are backed up, this can cause delays, heartache, and tension for the families and were problems that probably could have been avoided.

I want to say firmly, I am not a lawyer. I am a Realtor who specializes in selling homes in Probate and this is not legal advice. If you are going to be involved in intra family title changes PLEASE get the advice of a lawyer. This is complicated stuff.

I just want to give you a few examples so you can see that you should not assume anything when it comes to Probate sales. To see First Example click here

3rd Example:

Mom and Daughter 1 own a home together. Both are on title as Joint Tenants and own it equally. They need cash so Daughter 1 gives her share to Mom and Mom gets reverse morgage.

Mom does not make a will leaving 1/2 the house to Daughter 1 and 1/2 the house to each of the 4 daughters including daughter 1. She plans on doing it, but never gets around to it.

Mom dies unexpectantly, with no will, no trust, and only a verbal agreeement with Daughter 1.

Reverse mortgage company tells Daughter 1 she needs to sell the house or pay back the reverse mortgage. Daughter 1 can not sell the house or do anything without Probate Court permission because she does not own the house any more and there is no will or trust.

Daughter 1 calls me and give her a referral to a Probate lawyer who will get paid through the sale of the house since there is no cash in the estate.

Daughter one will ask the court to appoint her Admistrator of the estate then ask the other 3 sisters to give up the half of the equity that was supposed to go to Daughter 1.

Hopefully the Probate Court will agree to all of this. It is not guarenteed.

As you can see, these are complicated issue, made more complicated by actions taken by owners and family members before the owners died.

The moral, just because you think you have the right to sell a house in probate, that does not mean you do. Be sure and consult a Probate Attorney and a Realtor who understand Probate Sales before you proceed.

If you have any questions about selling a home in Probate or need a Probate Realtor in Half Moon Bay or anywhere else in the Bay area please feel free to contact me.

Marcy Moyer

Keller Williams Realty

650-619-9285

Do You Have a Right to Sell That Half Moon Bay Probate Home Part 2

Do You Have a Right To Sell That Half Moon Bay Probate Home Part 2?

I just want to give you a few examples so you can see that you should not assume anything when it comes to Probate sales. To see First Example click here

Second Example:

Mom owns home in Pacifica in a trust free and clear after Dad passes. She needs money for daily living expenses so she takes out a reverse mortgage.

Eventually she is unable to care for herself. She takes the house out of the trust and gives half to Daughter 1 as joint tenant so daughter has right of survivorship and right to sell house to pay Mom’s assisted living expenses.

Mom’s health gets worse and she needs to be moved to assisted living. Mom and Daughter 1 decide to sell the house to pay for the finest assisted living they can find.

Mom moves to assisted living and 3 days later dies.

Daughter 1 wants to sell the house which has plenty of equity that was not used to take care of Mom, so she plans on splitting it with Daughter 2 and Son 1.

Reverse mortgage company says “Hold Your Horses.” You had no right to change title of house without our knowledge. They claim:

Reverse mortgages are for senior home owners only, not their children. Daughter 1 should not have been on title because she was not given permission by Reverse Mortgage Company.

Joint Tenancy is an equal partnership between all parties. All partied must be equally responsible for any liens/mortgages on the home. Only Mom was on the loan so she should have been the only one on title.

You can see the problem here.

I suspect this one ends up in Probate Court with Court Confirmation needed instead of a fast, clean easy sale.

Tomorrow I will give you details on other issues that have come up in my Probate sales.

If you have any questions about selling a home in Probate or need a Probate Realtor in Half Moon Bay or anywhere else in the Bay area please feel free to contact me.

Marcy Moyer

Keller Williams Realty

650-619-9285

Do You Have a Right To Sell That Half Moon Bay Probate Home?

Recently I have been involved with a number of families were trying to sell homes they thought they inherited or had title to, but wound up in Probate instead. Since the Probate courts are backed up, this can cause delays, heartache, and tension for the families and were problems that probably could have been avoided.

I just want to give you a few examples so you can see that you should not assume anything when it comes to Probate sales.

First Example:

Mom owns home in Redwood City free and clear with no mortgage. She has 4 children and wants only 2 of the children to inherit the home. She signs a deed transfer her daughter, not a lawyer, drew up saying that instead of owning the house only in her name she gives 1/3 interest to one daughter and 1/3 interest to one son.

Mom dies. Son and daughter think they inherit the house 50/50, but that did not happeb. Deed does not say all three own as Joint Tenants. That would have provided the right of survivorship. Not only that, but daughter as executor of estate can’t sell the house. The 1/3 interest of Mom now has to go through probate and since there was no will all 4 children get to split Mom’s 1/3. Daughter has to be appointed by the Probate Court as Administrator of the Estate before she can sell the home.

It gets worse. They have to go through probate, hire a lawyer, and pay court costs for 1/3 interest in a house.

The mistake here was not spending the money up front to get advice on how to accomplish Mom’s wish that only two of her children inherit the house.

Tomorrow I will give you details on other issues that have come up in my Probate sales.

If you have any questions about selling a home in Probate in Half Moon Bay or anywhere else in the Bay area please feel free to contact me.

Marcy Moyer

Keller Williams Realty

Specializing in Probate and Trust Sales

650-619-9285

Keller Williams Realty Palo Alto

Tuesday, September 29, 2015

Elegant Sunnyvale Town Home - 360 Santa Elena Terace, Sunnyvale, CA 94085

Thursday, June 11, 2015

How Much To Offer On A Mountain View Condo With Multiple Offers

Anyone trying to buy a condo in Mountain View right now knows that it is tough out there. There are many more buyers than sellers and many Mountain View Condos sell with multiple offers way over list price. Some homes go as much as 30% over asking, but some do not. How does a buyer make the decision about how much to offer to have the winning bid in a Mountain View condo multiple offer situation and not overpay?

The answer is not simple, and sometimes it is not a question of price, but terms, like contingencies, length of escrow, length of rent back, etc.

But for right now, let's just discuss price. Here are some things to keep in mind when you make an offer on a Mountain View condo in a multiple offer situation,

1. In my opinion the most important thing is, how much is this home worth to you? In other words, what price would you offer so that if it sold for $1000 more you would not be sorry because you do not want to pay that much. It may be that you would pay more than your offer if you could, but you can't so you are just doing your best. But if that is not the case you need to decide how much the house is worth to you so that if you do not get it you will not have regrets.

2. How is the asking price of this home compared to market value? If the house is listed low it will get multiple offers and sell for much more. If it is listed at or above market value it will not. This is not rocket science. Figuring out market value can be a little tricky since there are many variables, and the market is a moving target, but a good Mountain View real estate agent should be able to help you analyze comps. Once you know the market value you will have to offer more in an appreciating market like we are in now. Sorry, but that is the truth.

3. What is the style of the listing agent? Does he or she like to list homes very low to get as many multiple offers as possible on their Mountain View listings? Does the agent over value a home to try to get more money for their client, or just try to win out on a competitive listing? Does the agent like to work with multiple counter offers, or accept the the first best offer? Your agent should be able to give you insight into what other Mountain View real estate agents like to do.

In the end, the final offer price and terms will be your decision, but if you have a great Mountain View real estate agent he or she can help guide you through the murky waters of Mountain View multiple offers. On the plus side for would be buyers, now that the spring market is over, the prices are starting to stabilize and this could be a good opportunity to buy without quite as much competition.

If you have any questions about buying or selling a condo in Mountain View please feel free to contact me.

If you would like to search for condos for sale in Mountain click here.

Marcy Moyer