We're back from New York City and I'm still singing . . ."If I can make it there, I'll make it anywhere, It's up to you, New York, New York" We made it to four plays in five days, the 9/11 Memorial, the Tenement Museum (You'll never look at your house the same way again. We all live in mansions compared to what our immigrant forefathers endured - 350 sq' for a family of 4-6!), the High Line and Central Parks and the Natural History Museum, and I thought about work . . . hardly at all!
But even while vacationing on the opposite side of the continent, I was able to send out last week's edition of The Perspective via the magic of the Internet. Knowing of our impending vacation, I'd penned the majority of it before I left and with the push of a button, viola!, it landed in your "in box," and in ours.
"Do I have to read this?" Cliff asked me as we took a break at Carnegie Deli, pausing to check our emails. (Evidently, Cliff only reads my musings when he's certain to hear about it from his friends on the tennis courts.)
"Have to?" I replied, a wee bit insulted. "These are pearls of wisdom I'm passing along."
That may be an overstatement on my part, but it's not an unfamiliar sentiment, on his. This same sentence is often repeated by my clients when they are presented with a large stack of "DISCLOSURES" as they begin to get serious about a home and more committed to making an offer.(Excuse me for repeating myself with respect to disclosures, but it's an important topic).
Given that the vast majority of disclosure packages are well over a hundred of pages, they can be incredibly daunting - even for me, who's read several thousand sets of them. Ironically, the smaller the home, the larger the disclosure package seems to be. In addition to standard reports, condominiums also include HOA's (Home Owner's Association) Minutes, and By-laws (wow, that's some seriously fun reading).
Moreover, the disclosures packages seem to get denser with each transaction as new documents become mandatory, and what's more, they may often include the disclosures from past transactions as well. Don't assume these old disclosures are irrelevant. They may, in fact, contain very vital information and inspections/reports that were NOT conducted this time around. If the Pest Report has been updated, it's likely that the previous report is less relevant, but if a new engineering inspection hasn't been ordered, the old one, may contain very useful information worthy of closer review.
As it did recently for clients of mine who came across a disturbing foundation report buried deep within the stack, that might have proven insurmountable under different circumstances. However, upon its discovery, they invited another engineer to the property - prior to presenting an offer - and were able to assuage their concerns. With real numbers in hand and updated information as well, they proceeded to purchase the home and will take possession today. (Congratulations!) Understanding the scope of the work ahead of them and the costs associated with it made for a very informed Buyer and taking the time to read ALL of the disclosures, meant the difference between purchasing or passing on the home without reservation.
This was also true too, for clients involved in a short sale transaction last year. Although such purchases don't require inspections until after the bank has approved the offer, they opted to spend some time and some money on inspections UPFRONT, primarily because the disclosure package was alarmingly incomplete. As a result, these Buyers were also incredibly well prepared and in a position to actually negotiate on their offer with the bank before we had gone too far down the path. (Yes, it's possible to renegotiate with the bank, even on these short-sale "AS IS" properties.)
In both cases, exploration and thorough reading of the disclosures made for two very different, but ultimately, successful outcomes.
So yes, you have to read it (and so do I)! *Happy Leap Year btw!
It's February which means love is in the air. Did Cupid make a house call last week? I certainly hope so. We're each of us, entitled to a little TLC now and again and at no time is that point more evident than during the season of Saint Valentines. (See how I stretched that into a whole "season" and not just one day?)
This topic got me thinking about the rhythm of love and how it ebbs and flows over time (let's hope it flows more than it ebbs). My folks have been married for more than half a century and I can't imagine one without the other. Along the way, they have built an entire life full of shared memories, and given rise to six children, thirteen grandchildren, and five great grandchildren. For better or worse, that's a legacy worthy of respect. With more than two decades under our belt, I'm counting on Cliff and I going the distance as well (a feat that might be much easier if he would just hang up his clothes once in awhile! ).
On the other end of the spectrum, the sweetest set of newlyweds I helped last year were a couple in their 60s who had tangoed their way into each others hearts and were once again committing to love, to marriage, and to home ownership (which is where I came in). They landed in a wonderful home in Kensington where I picture them now dancing in their kitchen on a nightly basis. It's reaffirming to see that love knows no boundaries, nor is it limited by age. In fact, it seems to only grow stronger with time.
Not surprising, the home-selling process follows a rhythm too, as Buyers and Sellers fall in and out of love as they gingerly progress through the transaction. In truth, almost every deal involves a little "love, hate, love," tug-of-war, so don't be surprised if you find your emotions are entirely mixed. Selling a home - no matter the circumstances - is an incredibly emotional process at best. If you haven't the luxury of defining the next transition or haven't yet identified your new home , it's also a tremendous leap of faith.
In an ideal world, a prospective Buyer comes in, falls in love with the home, makes an emotional connection, and crafts a winning offer. The Seller, now smitten with the flirtatious Buyer, accepts the offer and seals the deal. Congratulations, it's a love match!
Uh, not so fast . . . inspections begin and unexpectedly, there are a few items that are brought to your attention for discussion, or worse yet, entirely untenable to this much more discerning Buyer. (Where'd this guy come from?) Suddenly, it doesn't feel so "nice" anymore. Suddenly it feels rather nit-picky and objectionable, as the Buyer comes back seeking a reduction in price, or some other expensive and inconvenient resolution to the issue. Suddenly, you're questioning whether you still want to sell your wonderful home at all and whether or not this Buyer fully appreciates it? Hey, where's the love?
This is the point in the transaction where I like to remind my Sellers that this emotional roller coaster is very typical. In fact, it's the very rare transaction that proceeds without some back and forth negotiations, some readjustment of expectations, and even some pang of regret. It's only natural. This has been your home and by extension, the place your memories were formed. In large part, our homes define who we are.
Happily, by the time you reach the close of escrow, most of those negative feelings have passed and with patience and good intentions, we have successfully moved past any bumps in the road - both physically and emotionally. But even if we haven't, to quote the fabulous Tina Turner, "What's love got to do with it?"
As I've often stated, it's best not to take these things too personally. Granted, that's a tough order when it's your home that's literally been picked apart. With the exception of romance, love OR hate, rarely ever serve the deal in a positive way so don't get too emotionally invested or attached.
Where love is concerned, you don't have to "love" the new Buyer, nor do you have to "love" the idea of leaving your home and moving on. You don't have to "love" negotiations, compromise or even resolution for that matter. You don't have to "love" any of it at all (and probably won't). But IF (despite all the drama) you can retain your "capacity for love," you will very likely experience a much more fulfilling experience and a more positive outcome to boot.
However, when it comes to Valentine's Day, love is not only a prerequisite - it's a requirement. So go find the love! You deserve it, especially if you've just come through a challenging escrow.
A belated Happy Valentine's Day to you all!
Okay, I'm going to admit it - I hate a line. To be more precise, I hate being in line - at the grocery store, the bank, the movies, the post office, the airport, the amusement park (what's amusing about that?) or anywhere else for that matter. No matter the reason, it always seems that lines add up to a colossal waste of time. While 'patience may be a virtue,' it's clearly not MY strength. So it might surprise you to learn that there are times when I am going to go against my natural grain and encourage you to "wait in line!"
In a perfect world, a Buyer finds a house they love, writes an attractive offer, and the Seller immediately accepts it on the spot (absent any fanfare or drama). Inspections begin immediately, contingencies are subsequently removed, financing is easily obtained and underwritten, the deal closes in short order, and everyone lives happily ever after!
Sounds like a fairy tale . . . and it is.
In the real world (or should I say in the "Real Estate" world) good houses are still trading in strong competition, especially here in Piedmont and Berkeley. Despite reports that indicate the NATIONAL market is still softening, LOCAL inventory is scant and interest rates are incredibly attractive. Put them together and this combination adds up to heavy pent-up Bay Area buyer demand. (Prepare to put on the boxing gloves.)
So what to do, given the circumstances?
The first is to realize that there's only so much we can control. Once you write your best offer, the rest is out of our hands. We simply can't control how many other offers will show up, OR dictate the terms of the other interested parties. (It's probably safe to assume they want the house as much as you do.) Unless you have "All Cash" to spend, even if you have the highest offer at the table, you may NOT have the best terms, which means you might find yourself coming up just short in the final analysis.
The second is to realize that our Spring Market is just getting underway. There will undoubtedly be many more houses coming to market in the next few months, and for the reasons outlined above, everything is pointing to very strong activity in the immediate future. Let's add to the list, a return of consumer confidence and skyrocketing rents (if you can even find a rental) and home ownership begins to look very encouraging once again. Take heart. Your opportunity is on the horizon.
The third, is to consider a "Back Up" position, which may be your best opportunity to slip into the sale without further competition should the Buyers in first position waiver for any reason. This has advantages and disadvantages that you should fully understand before agreeing to opt-in for second place.
The advantage obviously, is that it places you next in line. Should Buyer#1 exit the deal, Buyer#2 (that's you) immediately moves into escrow upon proof of cancellation of the first offer (it's important to make sure that the home isn't being sold twice).
Sounds good, so what's the disadvantage?
Here it is: the threat of a "Back-Up" Buyer is often enough to keep Buyer#1 in line. With you waiting in the wings, Buyer#1 isn't likely to risk the sale by renegotiating the price or pushing the contingencies, as they might otherwise do if they didn't have the added pressure of your looming presence. Still, short of writing the best offer, this may be the only opportunity you have to achieve your goal, so it is worth serious consideration under certain, selective circumstances.
Either way, it's important that you understand that you will be helping secure the purchase for the Seller!
Still, it may be worth a shot. I have clients who recently pursued this strategy on a darling bungalow in Berkeley and took it one step further by crafting their back-up offer slightly higher than the accepted offer.
Why? More money acts as a carrot and incentavizes the Sellers to show Buyer#1 the exit door should he/she falter in any way. In this particular case, Buyer#1 tried to change their terms after ratification of the contract, were then given a "48-hour Notice to Perform" and long-story-short, my clients are now happily in contract on this wonderful home (all's well that ends well - for them, anyway).
So write your own story (it doesn't necessarily have to be a 'fairy tale') and I'll do my best to deliver a happy ending!
Through a series of mishaps, I have been driving rental cars for the past four weeks while my fancy station wagon is undergoing repairs. As a result, I have become very familiar with Sirius radio, and specifically with channel 72; a station that celebrates my first love - Broadway!
(Sing it with me . . .)
"Cash for the merchandise, cash for the button hooks,"
"Cash for the cotton goods, cash for the hard goods,"
"Cash for the fancy goods,"
"Cash for the noggins and the piggins and the frikins,"
"Cash for the hoghead, cask and demijohn. Cash for the crackers and the prickles and the flypaper."
"Look whatayatalk, whatayatalk, whatayatalk, whatayatalk?"
"Ya can talk, ya can talk, ya can bicker, ya can talk, ya can bicker, bicker, bicker, ya can talk all ya want but it's different than it was"
"No it ain't, no it ain't, but ya gotta know the territory!"
These traveling salesmen, from Meredith Wilson's "The Music Man," certainly understood what drives a "free market economy" (which is to say that it ain't exactly "free"). I don't know what a 'piggin' or a 'frikin' is, but I do know that there's been a huge influx of cash buyers to our market as of late, and in a competitive marketplace - and one that's also fraught with misconceptions - it certainly helps to "know the territory!"
One extremely, architecturally intriguing, GRUBB Co. listing in neighboring Berkeley, received seven offers last week and three of them were "ALL CASH!" That's quite telling. But what's more important to note, is that "All Cash" purchases now make up approximately 30% of ALL housing sales. Whatayatalk, whatayatalk, wheredayagitit, whatayatalk?
While it's true that the advantage of these "All Cash" sales are originating from investors speculating on bank owned (REO's) and short sale properties - with the goal of flipping them for a quick profit - there are a growing number of home acquisitions that are increasingly taking place in the high-end marketplace as well.
Whatayatalk, whatayatalk, wheredayagitit, whatayatalk?
To be fair to the majority of us mere mortals who rely on lending institutions to fund our home purchasing dreams (thus making them home realities) EVERY home sale is essentially "All Cash" once funds are received in escrow. However, the truth remains, that Cash IS King - in this or any other marketplace.
Why? Because "All Cash" offers completely bypass any and all lending requirements and thereby remove the appraisal and underwriting conditions that banks rely upon. As such, "CASH" purchases remove the uncertainty Buyers and Sellers have with respect to making "value," especially when heavy competition has pushed the "market value" well beyond the actual, "appraised value" a home might easily support.
Moreover, cash purchases can typically close in as little as a week. With NO lending process with which to weigh them down, closing can be as simple as ordering a title search, clearing the check, and recording the deed! Whatayatalk, whatayatalk, wheredayagitit, whatayatalk?
Even so, there are clever Buyers who write "all cash" offers, with the intention of putting a loan in place after acceptance. In theory, it's not a bad strategy IF you have confidence in your lender's ability to deliver a timely product. But be forewarned, IF your lender cannot perform in the time specified by the contract, you can (and will) in all likelihood, be held to the financial obligation you initially spelled out in the purchase agreement to begin with. In other words, "Show me the money!"
Remember, your ratified agreement is a bonafide contract and as such, you are legally obligated to meet the terms and timelines set forth. Moreover, there is nothing that compels the Seller to wait while you change conditions and put more favorable financing in place on your end. (Ditto for those of you who "shop" interest rates and switch lenders after ratification.) Buyers, tread carefully before employing such "bait and switch" tactics, as your perceived gain could ultimately cost you the home altogether! Whatayatalk, whatayatalk, wheredayagitit, whatayatalk?
Finally, "cash out" acquisitions (purchases where equity is recovered AFTER the close of escrow) tend to have a higher interest rate than initial purchase money, require higher reserve ratios, and when jumbo money is involved (sums greater than $625,750) max out at $500,000. In short, you won't be able to borrow as much as you would have, had you put the loan in place - prior to the close of escrow. Got it? (Good.)
(Note to Buyers: Bank of America has suspended funding "cash out" refinancing nationwide until further notice. Will other banks follow suit?)
So for those of you lucky individuals with cash to spare (Can you say: "in-your-Facebook?") your "ALL CASH" offer is, indeed, likely to move you to the head of the pack AND it's more than welcome by anxious Sellers who love seeing those "All Cash" offers come their way . . .
But ya gotta know the territory!
(With thanks to John Glynn of LaSalle Financial who began the "cash out" conversation at last' week's Grubb staff meeting. John can be reached at email@example.com or at 510-339-4300/ext.123).
I glanced over at my new Buyer, an expectant mother who was just a few months along. She and her husband had recently arrived in the East Bay by way of Florida, and the three of us were on a car tour of the Oakland neighborhoods, while I described the pluses and minuses of each. Because of the topography of the hills and the expansive area to cover, it's an incredibly windy tour at best. Due to years of aggressive San Francisco driving and the limited time restraints, it was a bit like being in the car with Mario Andretti (my apologies, I really should slow down).
"How are you feeling?" I asked her as I curved my way down the hill, recognizing the all too familiar "green around the gills" kind of look I had experienced with my own two pregnancies, several years ago.
"I'm a little carsick," she meekly responded, as nausea began to creep in.
"Hang on, we're almost done," I said, heading back to the Village, "I know exactly how you feel" (and regretfully, I did).
Listen, I know there are women who weather pregnancies gracefully, but I wasn't one of them. Morning sickness? Please!!! I wrestled with it morning, noon, and night for forty weeks, only finding relief after giving birth - and still managed to gain fifty pounds with each son (that's just too cruel).
In contrast, my girlfriend carried so effortlessly, that she agreed to be a surrogate for her brother and his wife, who were unable to successfully carry on their own. That's true grace. Not me - extreme morning sickness had prevented me from trying for that elusive girl, although my husband, Cliff, passionately argued in favor of another attempt (you carry it). After two very "green" experiences, no way I was going back in for round three. I literally, couldn't stomach it.
That's a bit how my sellers felt recently as we worked our way through the sale of their lovely home. After wrangling on a price, waiting patiently for inspections, and then negotiating once again, they sincerely began to wonder at what point the whole thing would just be over. Mind you, their sale wasn't atypical; in fact, it was very common as home sales go, with several rounds of showings, inquiries, zealous inspections, and yet, more questions. Still, it's pretty nauseating in the moment as each side wonders what is left to be found and if the deal will finally give birth (it did).
Hang in there, selling your house is a bit like pregnancy; there's a longer gestation period than you would like, but the end result is usually worth the wait.
With respect to inspections, here's the thing you need to remember. Inspections protect the Sellers, as much as they protect the Buyers. So important is the "due diligence" process that The GRUBB Co. really frowns upon waiving it - even when buyers are more than willing to do so.
Why? Because disclosures - no matter how thorough - can, and often do, miss something that is likely to come back to haunt you down the road. Ironically, the longer we live in our homes, the less likely we are to recall imperfections or to point out items that may be of legitimate concern to potential buyers. Frankly, as homeowners, we tend to overlook the small defects (or even the large ones!) so its easy to make the mistake of thinking "if it doesn't bother us, why should it bother them?" And therein lies the trouble . . . .
In truth, that barking dog next door that you rarely notice because you work five days a week, can become a HUGE issue to the new buyer who is a stay-at-home mom with a young infant. The negligible amount of water that gets into the garage when it rains, becomes an EXPENSIVE lawsuit when the buyer mistakenly assumes that the garage stays completely dry, and the driveway you thought you shared (but don't actually have a recorded easement to) can really cost you BIG TIME if that agreement suddenly becomes something else once the new Buyers take possession.
In reality, an item that might carry virtually no weight - if known prior to the close of escrow - can and does, becomes a MONUMENTAL deal when discovered after the new Buyers move in and discover that their expectations (or your representations) haven't been appropriately met.
So don't just disclose 90% of what you think is true, DISCLOSE IT ALL - especially if there is something ambiguous that needs clarification. With a running start, these issues can usually be resolved or dismissed, and no serious Buyer will think less of your property, BUT he or she will be much better informed as a result (and rightfully deserve to be). With full disclosure, Buyers are hard pressed to claim ignorance and sidestep responsibility later on. Avoiding any unwelcome surprises with respect to a home sale from the start, makes everyone happier and less litigous in the long term. Ah ha, now I get it! (I thought you would.)
With respect to pregnancy, it's a different story. If we really knew what lay ahead - both with the pregnancy itself and the years of parenting that come after - it's doubtful most of us would go through with it at all.
Thank goodness babies are cute. They almost make up for the months of waiting and better yet, they are still years away from turning into surly teenagers (but that's another column).
Julie Gardner, has been writing The Perspective for 12 years and has published more than 500 essays. She is also a frequent contributor to the Sound Off column in the Real Estate section of The San Francisco Chronicle.