Silicon Valley Real Estate Guide

15, 10, even 5 years ago, the art of presenting an offer was a valued skilled that every agent tried to perfect.  There were benefits to both the buyer and seller.  A seller and his/her agent would meet face to face with the buyer’s agent, allowing the buyer’s agent to present his/her client and their offer in the best possible light.   The face to face meeting allowed the buyer’s agent to establish rapport and attempt to convince the seller to work with the buyer’s offer.  In return, seller’s could ask questions to get a better feel about the offer, the buyer and the buyer’s agent. 

Flash forward to today when the typical newer agent has never presented an offer “live” to a seller and his/her agent.  Rather, they walk over to the fax machine, place the offer with any supporting documentation into the machine, dial the number and press send.  The agent waits for the verification printout confirming that the fax machine or computer on the other end has received the documents.  Then the agent goes about his/her daily business hoping and waiting to hear good news on their offer.  Is this type of behavior really providing a service to the buyer?, the seller? or the seller’s agent?  I don’t think so.

I define good service as doing everything possible to make sure that my client is satisfied based upon my knowledge of their real estate goals.  In doing this, I try to make sure that I do everything better than my competition.  Granted, I’m not always successful, but I’m constantly trying to improve.  Below are eight basic steps that I think lead to excellent service.

1. Personally answer the phone.  If unavailable, personally get back to client within two hours. 
2. Never make promises that one can’t keep.  In short, be reliable.
3. Listen, listen, listen.  How does one know what the client wants and how they want it unless you ask and then carefully listen.
4. Deal with complaints personally and timely.  Be responsible.
5. Be helpful to all, even if there is no immediate benefit.
6. Treat people as one would want to be treated…be courteous, helpful and knowledgeable.
7. Go the extra step to make sure everything is in order.
8. Don’t work with people you don’t want to work with.  They can zap the life out of you and affect your ability to provide service to others.

Where does poor service come from?

Bad service, in part, gave rise to the “less than full service” real estate companies who’s brokerage model places a premium on giving the consumer “facts, figures and data,” but not a high level of service.  Buyers took on on some of the duties that the traditional real estate agent normally provided.  Because the buyer did a large portion of the work, they received some form of rebate on the transaction.

Any time there is a change in one of these “less than full service” real estate companies business plan, the blogosphere lights up like a summer’s sky on the fourth of July.   I’m not here to bash “less than full service” providers because they do provide a service to a certain (small) percentage of our buying public.  Rather, what I am bashing is the lack of service provided by many within the “full service” field.

Why do we as full service real estate professionals fax offers?  Why do we send our clients to open houses instead of taking them out on our own?  Why don’t we attend our buyer’s escrow sign offs?  In short, why is it that some full service agents provide less than full service, yet complain that they aren’t compensated correctly?  Below is an explanation detailing why some within our industry provide less service.

• For those agents who have been in the industry for awhile, they have become lazy.  Things have been so good for so long, they have become lazy in providing the level of service that they used to give.  This will surely change as the market softens.  The experienced agent will have to get back to providing excellent service or retire.
• For the newer agent, they lack the professional training and experience needed to be competent and comfortable in knowing what to do and how to do it.   In my experience, this is especially true in smaller brokerage houses who would rather have an agent out in the field than in a classroom or learning from a more experienced agent.  It’s become a short term solution that has ramifications for the long term bottom line.  Also, the residential real estate industry finds continuing education and/or improving one’s skills a necessary evil, not a valued commodity.
• There are too many real estate agents and not enough transactions to support them.  Too many agents are chasing the elusive deal.  Lets face it, in Los Altos and its surrounding cities, if you randomly interviewed anyone on the street, they could tell you the names of four or five real estate agents that they know.  One out of the four of these agents is making a decent living, the others hope to.  These financial constraints placed on these agents lead to a reduction in the level of service provided.
• The rise of the mega-agent phenomenon.  Mega agents provide a highly successful name with which consumers can relate to.  However, if you have a problem that needs to be addressed, it is highly unlikely you will be speaking directly to the mega-agent but rather to one of the mega-agent’s assistants who rarely has the authority to do anything. 
• The “less than full service” agent has shifted the responsibility for providing excellent service to the buyer as well as other people involved in the transaction. For example, when the “less than full service” agent isn’t available (or their business plan doesn’t allow for it) to show a property, attend an inspection, appraisal or property walk through, or any of the many duties that an agent normally does, the responsibility for providing those services falls onto others and usually into the full service agent’s lap.  Not fair and not all the time, but true!  

When consumers are looking for an agent to represent them in a real estate transaction, they need to find an agent who provides the level of service they desire.  A first time home buyer may need someone who will take them by the hand and walk them through the entire process.  A more experience buyer/seller may need less help.  

Excellent service is just one of many important functions a real estate professional provides.  As a consumer, I would look for someone who also has experience, expertise, skill and knowledge on the local level.  These characteristics will make your real estate transaction a trouble-free and profitable experience.

The Multiple Listing Service is our most efficient means to sell a home and the most reliable source of local market information.  The following information was take from our local MLS and is deemed reliable but not guaranteed. 

According to our local MLS provider (ProMLSlistings.com), there currently are 108 single family homes for sale in Los Altos.  Of these, 42 are under contract.  That leaves us with 66 homes that are actively being market for sale on the MLS. 

Below is the sales history of single family homes sold via the MLS in the city of Los Altos since 2005.  The results are broken down quarterly and on future posts I will be including the monthly sales stats for South Los Altos, the Highlands area of Los Altos, the Country club area of Los Altos and North Los Altos as defined by our MLS board.  Note: if you would like specific sales statistics for a specific area, please contact me and I would be happy to create a post detailing that information.

The above graph depicts the number of new listings and compares it with the number of sold properties over the same period of time.  Three points to make about this information.  (1) Not surprising, new listings and sales peak in Q2 and then bottom out in Q4 of each year.  (2) Since 2005, there has been a steady decline in the numbers of listings and sales each year.  (3) Sales in the first quarter of 2008 are the lowest since 2001.  How has the overall decline in listings and sales effected our local real estate values?

Since Q1 2005, both the average and the median sales prices for single family homes in Los Altos have steadily increased and/or appreciated.  The median sales price appreciated from $1,642,000. to $1,892,000.  This is approximately a 15% gain in 3 years.  FYI, I tend to use the median sales price because it is less sensitive to extreme variations in sales prices (either high or low).  Since we are going into Q2, we should see an increase in listings and sales. 

This graph shows the overall decline in inventory the past three years.  It also highlights the fact that 2007 was a year where listings were at near record lows (25% off the average of the last 10 years).   In fact, if you compare the annual number of new listings, 2007 was the lowest (400) in the last 10 years.  2000 was the next lowest with 481 listings. 

The continuous days on the market (CDOM) statistic is fairly useless because that number has consistently hovered around 30-35 days.  In tight seller markets, it drops to the mid 20’s and in strong buyer markets, it increases to the mid 50’s.  So we’re talking a difference of 3 weeks on the market.  In my mind that is statistically insignificant.

2008 has started with some good signs.  Inventory is creeping back up and days on market is down.  Does this mean that we’ll continue to get more inventory to sell?  I hope so.  Will sales take off?  That’s the big unknown.   We are seeing multiple offers on several properties and no offers on others.  I think pricing strategies will become more important as the year progresses.  One thing is for sure, our market has always been affected to a large degree by the amount of good listings to sell.

Join the celebration at Blach Intermediate School in Los Altos this Friday, April 25th from 4:30 - 7:30 pm.  Included in the festivities will be campus tours, memorabilia displays, a time capsule, memory walls, and a video playing throughout the event.  A formal program will begin at 5:30 pm where the student choir will perform, a combined current student and alumni band will unveil the newly commissioned piece, “Festival of the Falcon,” and Assemblyman Ira Ruskin will make a special presentation.  Food will also be available, including the Good Humor Ice Cream cart.  If you are an alumni, current student, neighbor or faculty member this is an event that you’ll not want to miss.

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Pricing a home to sell has always been somewhat of an art.  Price it too high and it will never sell.  Price it too low and you may leave money on the table.

During the last several years of our strong seller’s market, the mantra had been ”price them high watch them die,  price them low and watch them go.”  Overpriced homes rarely sold and when they did, it was only when/if the market caught up with the price.  Under-priced listings commonly received a multitude of overbids resulting in favorable terms and high prices.  However, we’re in a highly volitile market where the old pricing models don’t necessarily apply. 

Recent case in point.  Two homes, one in Palo Alto, one in Cupertino and both price incorrectly.  When these two homes hit the market, they were priced artificially low.  An offer date was set and offers came in.  Unfortunately for the seller, the offers came in lower than expected.  When the properties didn’t receive the desired bid up, the seller’s homes were “dead in the water.”  Note: the cynic in me believes the listing agents “promised/guaranteed” a huge bid up in order to get the listing.  Instead, the seller received solid offers but rejected all of them.  That’s right, the seller didn’t respond with a counter (or multiple counter) offer to any of the solid offers that he/she received.  Mistake #1 (wrong pricing strategy) was followed by mistake #2 (not entertaining buyer’s offers).  Can it get any better?

What does a seller do now given their pricing strategy failed?  Regroup and price the home correctly for the market?  Go after the previously submitted offers and try to negotiate an acceptable contract?  Pull the house off the market and forget about it?  No, these sellers re-listed the properties at a premium, an increase of 10-15% above the original list price.  

In my nearly 15 years of selling homes in the Los Altos area, I never realized the brilliance of this strategy.  List your home for $1,000,000.  Receive several solid offers.  Reject all of them.  Re-list the property at $1,200,000 in hopes that the buyer’s will realize their error and bring in a substantially higher offer (and probably much better terms as well) to match the seller’s new price. 

It should be interesting to see how these homes fair on the market at the “new and improved” price.  My guess is the homes will be on the multiple listing service (MLS) for a few weeks and then taken off the market where they will either be re-listed at a price more in line with the market (with a different brokerage) and/or sold quietly off-market for a discount.

My suggestion in pricing a home is to keep it within 3% of what recent homes of comparable size, location and condition have sold for.  Since our local market (Los Altos, Mountain View west of El Camino, Cupertino, Palo Alto) is still fairly strong, there may not be a need to list it more than 3% under the last equivalent sold home, but it should be pretty darn near that price.  

The key term here is “recent” sale.  If the house down the street is under contract, that’s your best comparable.  Have your agent contact the listing agent and get more information about that sale.  The more current information you and your agent have, the higher the probability for a satisfying sales experience you’ll have. 

Four quick points to correctly pricing a home regardless of market:  Note: if your agent can’t provide insight about the following, it may be time for a new agent.

Lastly, this is not a market to “test” your price because once your property hits the market, there are fewer options for you to employ that will maximize your sales price.  I’d like to end with a statement that is probably familiar to everyone, but is quite applicable to real estate “If you’re going to do it at all, do it right the first time.”  That means price your home correctly for your current local market.  This will give you the best chance of getting the property sold and allow you to move on with your life.

Although is looks like it, the circus has not come to the Rancho Shopping Center in Los Altos.  Rather, the shopping center is being fumigated.  In my 30+ years of living in Los Altos, I don’t recall the shopping center being closed down completely for any reason.  Enjoy the photos of Los Altos’ largest tent!

Compass Place condominiums, also known as Arcadia Terrace (named for the street the complex is located on), has always been a favorite condominium complex of mine.  Built approximately 14 years ago, Compass Place is conveniently located at the corner of Fair Oaks Avenue and Arcadia Terrace, near Highway 101 in Sunnyvale.  Comprised of approximately 240 units spread out among 16 buildings, most of Compass Place’s units are either 3 bedroom 2 bath (sizes range from 1250 sf- 1300 sf) or 2 bedroom 2 bath (sizes range from 1058 sf - 1174 sf).  However, there are a few 1 bedroom 1 bath units (867 sf) as well.

The complex features a nice swimming pool with showers which is located between building 605, 607, and 609.  Note:  during the summer and early fall, the units in these buildings receive constant pool related noise.  Located between buildings 613, 615, and 617 is a children’s play area, gazebo and small field.  Lastly, there is a larger grass field located between buildings 606, 608, and 610.

The buildings themselves are three stories tall and teh front doors are accessible via an exterior stairway (there are  no elevators).  There is second entry into each unit via an interior stairwell that exits at the ground level parking area and garages.  Note: most units have a single car garage (some garages are attached to the building and some are detached along the exterior of the property).  There are additional assigned parking spots as well as guest parking spaces.

The interiors of the units were originally built with the same amenities.  Most are still in their original state, but more and more are being remodeled.  Originally, the kitchens had white tiled counter tops, maple cabinetry and white GE appliances (gas stove-top).  The bathrooms where originally constructed with maple cabinets and a solid surface, all-in-one counter top and sink.  The showers and tub surrounds where also an all-in-one unit.  The master baths featured large soaking tubs.  The flooring was either linoleum and/or wall to wall carpet. 

A nice feature of this complex is the large in-unit laundry area that houses a full size side by side washer and dryer (most are electric dryers).  No stack-able unit here!  The condos have decent sized decks (corner units are smaller) that are plumbed for air conditioning units.  Note: when the complex originally was built, not many buyers ordered the A/C units.  More and more owners are adding the A/C units.  They are especially useful for owners of the tops floor condos that get quite warm in the summer/early fall.  Lastly, for those of you who like real wood fireplaces, the condos at Compass Place have them.

Given the choice, buyers prefer the units located in the odd numbered buildings because they are further from the traffic noise generated from highway 101.  Buyers also prefer the higher numbered buildings because they are farthest away from Fair Oaks Avenue and its traffic noise.  All things being equal, the most preferred buildings are 615 or 617 and the least preferred are buildings 101 and 102.  See development map below.

Most condo buyers prefer end units however at Compass Place, the end units do have some drawbacks.  For example, the decks on the end units are quite small and the view from the condo, in part, looks directly at the building next door.

I like the top floor units best because of the vaulted ceilings and there is no one above you, but they do have some minor drawbacks.  The top floor units tend to get more traffic noise (both from highway 101, Fair Oaks Avenue and aircraft noise).  As I already mentioned earlier, the top floor units are significantly warmer in the summer (and winter which is good).  Lastly, buyers have to climb three flights of stairs to access the top floor units.

All-in-all Compass Place condominiums have appreciated well over the years and have retain their value fairly well in the last two market corrections.  However, there is currently one unit for sale that is a short sale.  According to MLS records the owner bought the unit in late December 2005 for 500K and it is currently on the market for $519K. 

Below are sales statistics compiled for the last six months at Compass Place. 

Unit Number    Beds    Baths     SF      List Price     Sale Price 

609   #201            3           2      1250   $554,000      Available

609   #306            3           2      1300   $545,575      Available

608   #104            2           2      1058    $519,000     Available

607    #101            2           2      1058    $514,950     Available

610    #303           2           2      1160     $508,000    Available

606    #201           3           2      1250     $559,000    $554,170

610    #202          2            2      1160     $529,000    $529,000

615    #302          2            2      1160     $529,000    $529,000

609    #102          1            1        867      $430,000   $412,000

An interesting conversation broke out at our last Los Altos/Mountain View real estate tour meeting regarding an increase in a phenomenon we haven’t seen since 1999-2000, pocket listings.   Flash back to 1999-2000 when inventory levels were low and buyer demand was high.  Some real estate brokerages took listings and never made them public, opting to sell them in-house rather than with the help of co-operating brokerages.  Currently, our local inventory is deplete of quality listings.  Buyers are out looking, albeit more cautious.  Put the two together and its creating an atmosphere where we’re starting to see an increase in pocket listings.

What is a Pocket Listing?

I’m defining a pocket listing as when a seller and real estate brokerage sign a listing agreement to sell a property but the property is not entered into the local multiple listing service (MLS).  When a broker is hired to sell a property, a written listing agreement is signed.  The broker normally agrees to cooperate with other brokers and to share a portion of the total real estate commission paid by the seller.  However, in this situation, the property is not entered into the local MLS.   Note: Our real estate board rules require the seller to sign a document indicating that they are aware that their home will sell for less if it is not marketed on our local MLS.  Lastly, a pocket listing is usually “double ended,” meaning the brokerage representing the seller is also the brokerage representing the buyer. 

The overwhelming majority of agents at the tour meeting agreed that sellers receive more for their property when it is exposed to the open market.  The most effective method of exposure is placing the property on our local MLS. 

There was one dissenting opinion in the group.  Hmmm, could it be that his brokerage find pocket listings more profitable?  This broker’s argument was that “in specific circumstances,” a pocket listing achieves a higher price for the seller than if the home was marketed on the MLS.  Interesting, less exposure to fewer buyers equals a higher sales price.  Call me dumb, but I (and everyone else in the room) didn’t understand the logic.  I can understand his logic if he tried to couch it in terms of protecting the seller’s privacy or the seller’s didn’t want their neighbors knowing the home was for sale.  But to claim that a seller will receive more for their home if it is sold “off market.”  I don’t think so.  The following simplified example details another problem for sellers of pocket listings.

Seller “Able” signs a listing agreement with brokerage “Camp” to sell “Able’s” home for a list price of $1,000,000.  “Camp” puts a few ads on Craig’s list and buyer “Bud” responds.  “Bud” decides he wants to buy “Able’s” home.  “Camp” writes up a contract getting the price and terms “Able” desires.  Bud gets the house, “Able” sells her house and “Camp” double ends the deal.  All are happy, right?  Wrong? 

Who is representing who in the above case?  ”Camp” has a fiduciary responsibility to get “Able” the most for her house.  “Camp” also has a fiduciary duty to protect “Bud” from overpaying for the home.  Which did he do?  Besides himself, who’s interests is “Camp” representing?  In addition to the likelihood of selling the home at a discount, there is an inherent flaw in selling pocket listings in house because of the problems associated with duel agency.  If the home never hits the open market, how does the seller (or his/her agent) know it has been sold for the highest price?  This is especially true when the market is in flux.

Most agent’s will have pocket listings for a short period of time while they are preparing the home for the market (ie. staging the home, getting inspections, making repairs and getting the marketing materials in place).   This is normal and once the home is ready, it is then place on the MLS and then sold. 

If you’re selling your home and want to maximize its sales price, don’t let anyone try to convince you that selling your home as a pocket listing will make you the most money.  It won’t and you might rethink working with the agent who says it will.

If you are a wine enthusiast and are looking for something to do this weekend?  See below!

Rhone Rangers Grand Tasting will be held Sunday (3/16) at Fort Mason’s Festival Pavilion from 2:00pm - 5:00pm.  Sample Rhone varietals from over 130 Rhone Ranger member wineries and 35 artisan food producers from the Bay Area and beyond.

Testarossa Vineyards will be holding its Bein Nacido Vineyard release weekend (3/15-3/16) from 11:00am - 4:00pm.  The 2006 Bien Nacido Vineyard Chardonnay and 2006 Bien Nacido Vineyard Pinot Noir will available to taste.

Bargetto Winery’s will be holding its Monterey Tasting room grand opening this weekend (3/15-3/16) from 1:oopm - 6:00pm.  Celebrate the grand opening with barrel tastings, food, music and complimentary wine tasting.

Solis Winery will be holding its Merlot Madness this weekend (3/15-3/16) from 12:00pm - 4:30pm.

Kirigin Cellars will be releasing their 2007 Malvasia Bianca and 2004 Cabernet Sauvignon this weekend (3/15-3/16).

Burrell School Vineyards and Winery will be having a Jude Bischoff Art show on Sunday (3/16)

Have fun and be safe!

As anyone who knows me can attest, I am a die-hard Cal fan. On Saturday I took the kids to the women’s Pac-Ten basketball tournament at San Jose’s HP Pavilion to watch our beloved women Bears take on the Arizona State Sun Devils. 

In conjunction with the basketball tournament, the Bay Area Women’s Sports Initiative (BAWSI) was holding its Dads and Daughters program at 10:30 before the first game. A large crowd of mostly dads and their daughters gathered to hear words of wisdom from some of our greatest local female athletes and a couple of famous sport dads.

(L to R) Juli Inkster, Jennifer Azzi, Brandi Chastain, Bill Laskey, Brent Jones, Mark Purdy

Cal and Stanford each had a table full of “freebies” and women sports schedules, there was plenty of food and drinks, and two basketball shooting booths.  However, everyone was there to hear from the speakers. 

Brandi Chastain spoke of her military father who ended up coaching her soccer team and initially taught her how to run laps and do sit ups.  He knew nothing about soccer, so he and Brandi would go to the library to get “how to play” soccer books and watch “Soccer made in Germany” to learn the game.  

Jennifer Azzi talked about how her father would take her to every basketball practice, scrimmage and game.  Her family wasn’t wealthy so her father built her a basketball hoop out of scrap materials.  When Stanford won the NCAA women’s basketball tournament, Jennifer’s father stenciled onto the backboard, “Stanford #1.”

Juli Inkster’s father, who was as fireman, wanted her to play golf and was always asking Juli to go hit balls with him.  However, growing up Juli wasn’t a big golf fan, preferring to play basketball, baseball and other sports.  It wasn’t until Juli began working at Pasatiempo did she find the love for golf.  

When Bill Laskey and Brent Jones retired from professional sports, they wanted to help their daughters get involved in sports.  They figured the best way to be involved with their daughters was to coach them. 

What I took home from the program is that girls need to play sports and it is up to us as parents to encourage our daughters (and sons) to get involved in organized sports.  Spend time with your child because being involved in sports helps participants learn sportsmanship, team play, and competitiveness.  Organized sports also helps to build leadership skills, confidence and it promotes healthy lifestyles for all involved.  I would definitely attend another BAWSI event.

The Results:

Cal wins 65-61

In the semi-finals on Sunday, Cal beat Arizona State, Stanford beat UCLA.  In the finals last night, Cal got buried by a stronger Stanford team.  Good luck to both teams in the NCAA tournament.  Go Bears!

Me and my kids (Bear fans) surrounded by the Stanford women’s basketball team.  (Jayne Appel is waving, Candice Wiggins has headphones on).

Every so often, I’ll be showing property in an area that doesn’t look all that great.  The buyers inevitably will ask “Is there much crime in this neighborhood?”  Although I have friends in both the Sunnyvale and Mountain View police departments, I don’t have actual knowledge of crime stats for any of the neighborhoods that I sell.  Rather then make something up (you’d be surprised how many agents blow off the question by stating ”I’m not aware of any crime here”), I refer the potential buyer to the appropriate police department.  At least for some of the areas I sell, this information can now be found online at CrimeReports.com.

According to their website:

“The CrimeReports.com service provides law enforcement agencies with an affordable and easy-to-use Web-based service for managing and controlling the sharing of crime data with the public, in near real-time. Community members can then access their neighborhood crime information for free, empowering them to make informed decisions to help improve the safety of their families, friends, property and the community at large.”

In California, currently only four police departments have provided information to be posted on CrimeReports.com.  They are the Los Gatos/Monte Sereno police department, the Fremont police department, the Palo Alto police department and the San Jose police department.  Since I once lived in West San Jose, I ran a search using the address of a home I owned in the Strawberry Park subdivision located near Saratoga Avenue and highway 280. 

I first entered the type of crime I wanted to search for.  The type of crimes one can search for range from quality of life crimes like drunken disorder and traffic stops to violent crimes like robbery, burglary and homicide.  I chose to check and see if crimes like vehicle theft, burglary and homicide have occurred.  I set the date parameters for my search at 14 days and came up with the following results: 

According to the results, my old neighborhood had one “theft” crime reported within the last 14 days and it occurred on the 700th block of Saratoga Avenue.  Within about 1 mile radius of the property, there were a dozen or so crimes reported and most of them were property thefts.  I ran another search going back six months and the grid lit up like a Christmas tree.  The good thing is that most of the crimes were against property not people.  The bad thing is I had no idea whether my old neighborhood had a lot of crime. 

I had no base line to differentiate between what was a high crime neighborhood and what was not.  So I compared my search data with that of a neighborhood that I knew had a reputation as being a high crime neighborhood.  The results of the search made me feel a lot better about my old neighborhood.  Given that I lived in Strawberry Park for almost 10 years without any concerns, I knew first hand how safe it was and still is.

There is an interesting statistic bar above the map that tells how many total crimes occurred as compared with the parameters the user has set up.  For example, I searched for violent crimes and came up with 15 violent crimes out of a total of 159 crimes (see below).

According to the stat bar, between 2/23/08 and 2/25/08, there were 159 crimes committed and of these, 15 were of the violent category. 

In an effort to protect the victims, CrimeReports.com lists only the block on which the crime occurred, not the actual address.   Although listed as a search category, CrimeReports.com currently does not post information about California sex offenders on its website.  Yet other states do.  I wonder why?  Lastly, CrimeReports.com is only available in 15 states and only in a few cities within these states.  There is an area on the website where you can invite your local police department to participate.  If your city is not represented and you feel this service might be beneficial, you can contact your police department through CrimeReports.com and it might become a city that will post its data online.