Silicon Valley Real Estate

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Buying Pescadero Probate Property Where Animals Graze Without A Lease

Anyone who has looked for acreage in places like Pescadero, Gilroy, or Morgan Hill has probably come across a situation where a neighbor or friend has horses or goats or cows who graze the property. You ask to see the lease and the response you get is often, “There is no lease, they have an informal agreement that Ms X gets to keep her livestock on the property in exchange for the livestock grazing Mr Y’s land.

Mr Y does not have to pay the high cost of keeping the grasses and weeds cut and Ms X does not have to pay the high cost of boarding and feeding her livestock. It is a win win, and for decades no one has formalized the agreement.

Then, unfortunately Mr Y dies and his heirs need to sell the Probate acreage in Pescadero, or Gilroy, or Morgan Hill. There is no documentation of the agreement and no one is sure what Ms X’x rights are, or what the estate has to do to terminate the relationship. Or maybe the buyer of the Pescadero Probate acreage’s , Mr and Mrs Z’s don’t understand what their responsibilities are if they want Ms X to continue grazing, but don’t want her to have full tenant’s rights. In other words, Mr and Ms Z still want to use the land, so they do not want to lease out a portion of the Pescadero or Gilroy, or Morgan Hill land. They just don’t want to have to pay someone to mow it.

The answer to this dilemma is for Mr and Mrs Z to grant Ms X a license for Ms X’s horses to graze on a portion of the Pescadero Probate property they are buying. The license can be terminated at any time by the owners of the property. There are no tenant’s rights for exclusive use and Mr and Mrs Z do not need to give any notice or have any cause to terminate the agreement. The right to graze horses is a personal privilege and is not tied to the property in question. The horses do not have any exclusive use and Mr and Mrs Z can use the grazed property any time they want.

If Ms X had a lease then she and her horses would have exclusive right to use the property and Mr and Mrs Z would have to give notice to enter that portion of the property and could not tell Ms X to leave whenever they want.

It is a distinction that is important to preserve the rights of Mr and Mrs Z to use their new Probate property in Pescadero, or Gilory, or Morgan Hill.

I suggest if you are going to do this you consult a lawyer before closing escrow on that gorgeous view property in Pescadero, or Gilroy, or Morgan Hill, or anywhere else you may find it.

If you have any questions about buying or selling property, especially in Probate in San Mateo, Santa Clara, or Alameda County please feel free to contact me.

Marcy Moyer

Keller Williams Realty

650-619-9285

www.marcymoyer.com

Is It A Good Time To Purchase Investment Property in Silicon Valley?

Is This Is A Good Time To Purchase Investment Real Estate in The Silicon Valley?

YES!!!!!!

Next question? But seriously.

I previously talked about the effect of increased interest rates on Silicon Valley Real Estate. For my analysis of that situation please click here.

The upshot is that higher the interest rates will decrease prices, but maybe not in proportion to the cost of ownership, especially in higher priced/more popular areas of Silicon Valley.

This will keep the affordability of home ownership out of reach of many Silicon Valley residents. That means there will be a greater number of potential renters in the area which is good news for real estate investors.

Currently, the CAP rate on rental real estate has not been great, especially in high end properties. It is not uncommon to see 2% cap rates in multi- family homes in Palo Alto or Mountain View. The value was in appreciation.

No one is predicting much appreciation in this market in the next year or two, and rents are already ridiculously high. I am not convinced they are going to increase much in the next 2 years either.

Where I see opportunity in the Silicon Valley real estate investment market is in areas near the tech expansion in San Jose, or in those easy commuting distance but still affordable like Newark and Union City.

I believe that investing in rental property in these areas of the Silicon Valley have the potential for increased rental values as well as appreciation. They are more affordable than buying in higher priced cities like Mountain View, Palo Alto, Menlo Park, Saratoga, or Los Gatos, and they offer relatively easy commutes to the major employers, so they are good for attracting the demographics most likely to rent.

Of course you need to keep in mind rent restrictions in San Jose, so multi -family homes may not be your best option. Additionally the multifamilyhomes in San Jose tend to be extremely old and need a lot of repairs and upkeep.

I like the newer buildings in downtown San Jose as rental units. They are relatively affordable, don’t need a lot of upkeep, popular with the tech force so easy to rent out, and can give a pretty good return.

There are also many condos/townhomes in Newark and Union City as well as a lot of new construction there that is in the works. If the interest rates get too high and the newer construction becomes more difficult to sell, the builders MAY ease up on the rental restrictions and that would be a good opportunity.

If you are going to purchase a Silicon Valley investment property with a loan, then it is best to do so as soon as possible, because the increasing rates will not be working in your favor.

If you are purchasing a Silicon Valley investment property with cash then I think the first half of 2017 will be a great time to do that, as the pool of renters increases and the pool of buyers decrease.

If you have any questions about buying or selling investment property in Silicon Valley please feel free to contact me.

Marcy Moyer

Keller Williams Realty

650-619-9285

https://www.facebook.com/marcy.r.moyer

www.marcymoyer.com

@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