San Francisco Peninsula Real Estate Blog

Rates on 30-year mortgages dipped this week to the lowest level in more than six months.

Mortgage giant Freddie Mac said Thursday that 30-year, fixed-rate mortgages fell to 6.31 percent this week, down from 6.40 percent last week.

http://www.seacoastonline.com/news/09292006/business-b-929_mort-rates.html

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California Association of Realtors® Chief Economist Leslie Appleton-Young, someone we have long respected for her acute sense of balance in a tough job, says this month: “Many markets in California are...returning to a more sustainable and balanced housing market compared to the frenetic pace of the past several years.” That is certainly true. And with that, a new sense of reality seems to have sunken in for home buyers and sellers who are beginning to realize that the multiple offer situations and skyrocketing sales prices of the past few years, for the most part, have simmered down. The most important thing for prospects to remember (and you should remind them) – that in the long term, real estate is and always will be a great investment, especially in California, and this current market provides an opportunity for many to jump on in. Read full article San Francisco Bay Area (California) Market Update

* If you are thinking about relocating to the San Francisco Bay Area or are interested in buying or selling investment property in San Francisco, San Francisco Peninsula or Silicon Valley, please contact The Kamali Team. The Kamali Team specializes in Relocation and Investment Property and is focused on conducting business by referral.

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In April 2006, 25 single-family homes in Burlingame changed ownership. They stayed on the market for an average of 37 days. By the end of April, there were 28 new listings of single-family homes and a total of 35 which were still available for sale. On average, the sellers accepted offers very close to what they were asking, in April 2006.

Source: MLS Records

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First thing to remember is - As a buyer you don't pay commission. Also, work with a "Realtor", not just a Real Estate Agent. There's a difference. See the National Association of Realtors 2006 Fact Sheet

Assuming you are a first time buyer, then I would suggest working with someone who works well with first time buyers, someone who takes the time to explain things. It's better to work with someone who can communicate the process, the market and the inventory well. This person doesn't need to be a top producer. In fact, it may be better if this person is NOT a top producer, since they may have more time to help you, one-on-one. If the Realtor is too busy selling other properties, chances are that you will be spending a lot of time with their assistants. Now, this is OK, if the assistants are excellent but it may be better to work with a Realtor who is good but has time to guide you.

If it's important to you to build your team of professionals, work with someone who is focused on working by Referral. They are focused on building their business for the long term and will be happy to answser your real estate questions, anytime in the future. These people are not transaction-oriented. If you are interested in working with Realtors who run their business this way, go to ReferredPro, and you will be referred to an excellent Realtor.

I think it's better to build a good team of service providers from day one.

Ask your friends for a Referral to a good Realtor. Not all real estate agents are Realtors. Also, work with Realtors who work by referral. Those who work by referral are professionals others put their name to.

It's very important to work with a great Realtor from the beginning so that you can hopefully use the same Realtor in the future.

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If you are relocating to a new area, I strongly recommend asking your trusted Realtor for a referral to a good Realtor in the area your are planning to move into. Ask your Realtor if they have a network of Realtors across the country whom they have qualified. Ask your Realtor what their criteria is on how they decide who to include in their Realtor Network. Good Realtors network with other Realtors who operate in similar ways with their clients.

The advantage of this is that your referred Realtor will have a team of other good professionals they can refer you to. This is especially important if you are new to an area. This will make you feel more at home.

In my opinion, you will be in a much better position, in one, three, five, ten or even twenty years from now, if you start working with good professionals, from day one!

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I found some interesting statistics about San Mateo County. Source: California Assocation of Realtors

Median Price of Existing Homes in San Mateo County in December 2005 was $820,000

The Yearly percent change in San Bruno from Dec 04 (median sale price $570,000) to Dec 05 (median sale price $680,000) was 19.3%, which was the highest out of the following cities: Belmont, Daly City, Pacifica, Redwood City, San Bruno, San Carlos, San Mateo, South San Francisco. *note: not all cities within San Mateo County were compared against in this statistic.

The Unemployment Rate in all of San Mateo County, as of December 2005, was only 3.6%. Hillsborough had the lowest unemployment rate, at 1.4%, in all of San Mateo County, in December 2005. East Palo Alto had the highest unemployment rate, at 8.6%, in all of San Mateo County, in December 2005. It's interesting to note that the unemployment rate in San Mateo County was as high as about 6.5% around the July 2003 timeframe.

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Option Arm Mortgages have become a very popular mortgage program for some home owners. This program's most attractive characteristic is its flexible payment options. Payment options include 1)Lowest Payment/Differed Interest Option 2)Interest Only Option 3)30 Year Mortgage Payment Option 4)15 Year Mortgage Payment Option.

I will briefly describe each starting with the 15 Year Payment Option. The 15 Year payment option is exactly what it sounds like. Principal and Interest payments are fully amortized for 15 years and the loan will be completely paid off at the end of those 15 years. This option is best for homeowners who would like to minimize the amount of interest throughout the life of the loan, have enough cash flow for a larger mortgage payment, and would like to own their home as quick as they can.

The 30 year payment option is the conventional 30 year mortgage that has been most popular in the past and has received some competition in the previous years by the new breeds of loans. The 30 year payment option will always be lower than the 15 year and principal and interest payments are amortized over 30 years.

The Interest only option is a home mortgage with only interest payments being made for the first 10 years and the loan converts to a 20 year amortized mortgage thereafter. Payments are lower and only interest payments are made, hence the name. This option is for people who would like to maximize on their tax deductions, keep their loan amount the same, while minimizing payments.

The lowest payment option is for home owners who would like to pay the absolute minimum payment on their home mortgage. Interest is differed, meaning at the end of the month the loan amount actually increases; however, the homeowner is usually optimistic that the amount of appreciate will far exceed the amount of accrued interest each year. This allows a home owner to afford a larger home than they may have been able to afford without this option.

The Option Arm is very popular with self employed professionals who have varying income each month or who would just like to take advantage of the flexibility of choosing their own payments and letting their homes work for them.

This information is for educational purposes only.

1. Over 90% of For Sale By Owners end up working with a Realtor.
2. There are too many liabilities to sell on your own.
3. For Sale By Owners don't usually price correctly. If you overprice by 5%, you can lose 80%+ of the buyers. However, these are estimates assuming you work with a Realtor. However, if you try to sell by owner, you will get less exposure.
4. Chances are that you will attract investors who want to get a deal.
5. You will not be able to market or expose your home like a good Realtor would. Because of the lack of exposure For Sale By Owners get, their houses usually sit on the market longer and end up selling for less, even after saving 2 or 3% on the commission.
6. Realtors don't like to bring buyers to houses which are For Sale By Owner because they will end up doing twice the amount of work and get half the commission, since they will have to explain everything to the owner as well, who they aren't representing. Also, there are too many liabilities when dealing with For Sale By Owners. Remember, you still have to pay the buyer's agent a commission, assuming they work for a real estate brokerage.
7. Realtors work with other Realtors or Real Estate Agents at their office. If they represent you, they'll talk to others in their office and in the field. This will help get the word out to the right people, about your home.

* According to Thomas M. Stevens, President of the National Association of Realtors for 2006, "Finally, the plain fact is that hiring a professional pays off. The typical home represented by a professional last year sold for 16 percent more than those sold without a professional’s help. That profit more than pays for the agent’s commission. Millions of homeowners know it, and that’s why they will continue to call on experienced real estate professionals."

So why deter Realtors, attract mainly investors, restrict your marketing?

Chances are that your home will be represented much more professionaly by a Realtor, not to mention it will save you a lot of headaches.

Remember there's a difference between a Realtor and a Real Estate Agent and make sure you work with someone who's doing it full time. Make sure you speak to a Realtor. If you need to be referred to a highly qualified one, go to http://www.ReferredPro.com

The Kamali Team | Disclaimer | ReferredPro

The media generalizes when speaking about real estate. Just recently they said that the number of homes sales has slowed in the San Francisco Bay Area in January 2006 compared to January 2005. However, this conclusion is not true for Burlingame. The number of single-family home sales in Burlingame has actually doubled in January 2006 Vs January 2005.

I'd like to give an example of statistics for single-family home sales in Burlingame, California for the month of January for years 2006, 2005, 2004 and 2003.

* In January 2006, twice as many Single-Family homes sold in Burlingame, as compared to January 2005!

Read below:

In January 2006, there were 32 new single-family listings in Burlingame.
They sat on the market for an average of 43 days. 20 houses were sold. The January 2006 inventory of single-family homes was 37. The median price of the 20 houses which were sold was $1,151,000.

In January 2005, there were 24 new single-family listings in Burlingame.
They sat on the market for an average of 37 days. 10 houses were sold. The January 2005 inventory of single-family homes was 19. The median price of the 10 houses which were sold was $1,085,000.

In January 2004, there were 21 new single-family listings in Burlingame.
They sat on the market for an average of 48 days. 20 houses were sold. The January 2004 inventory of single-family homes was 32. The median price of the 20 houses which were sold was $880,000.

In January 2003, there were 37 new single-family listings in Burlingame.
They sat on the market for an average of 45 days. 10 houses were sold. The January 2003 inventory of single-family homes was 59. The median price of the 10 houses which were sold was $850,000.

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If you'd like to rent a condominium or a single-family home, would you choose to go directly to the landlord or go to a Realtor? Also, here I'll explain benefits landlords have in using a Realtor.

Here are some reasons to use a Realtor:

1. You'll have a real estate professional backing you up, in case things go sour. If the landlord doesn't look out for your best interest, your Realtor will. Your Realtor will represent you and hold the listing agent and the landlord accountable. If the listing agent is not communicating openly with the landlord, then your Realtor can communicate with the listing agent's broker.

2. If you are relocating, it's especially a good idea to work with a Realtor. You may not know many people around your new home. Your Realtor may help you to get you aquainted to your new place of residence. They'll be able to refer you to other professional services you may need. Realtors refer their clients to many other professionals every day. Be sure to ask your Realtor if they have experience working with Relocation clients.

3. The benefit to landlords, as well as tenants, is that Realtors know which forms and disclosures to use to make sure both parties know their rights before deciding to come into agreement.

4. Realtors also screen buyers and do a background check for landlords. This tends to reduce a lot of risk and increases the chances of having a good tenant.

5. Most importantly, a Realtor can help reduce a lot of headaches, time, and energy by showing you homes, communicating to all parties, explaining the lease agreement and disclosures, writing an offer and signing, accepting an offer and signing, preparing all parties for the move, making sure things go as planned, doing a walk-through with you before you move in and taking note of discrepancies, taking photos of the unit (in case you are out of town), give you phone numbers of utility companies, etc.

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If you are ever wondering what direction the real estate market is heading, ask your trusted professional Realtor. Don't rely on the media to tell you which direction the market is heading. Lots of writers journalists and writers have been "predicting" a real estate bubble for the last 7 years. If you had listened to them and not bought real estate during that last 7 years, you may be upset about it.

In the news on February 17, 2006, you'll see headlines like Home Sales Falter, Hinting a Slowdown (San Francisco Chronicle - Writer Kelly Zito). Kelly says that home sales tumbled in January 2006. However, she doesn't know about what's happening in February since she's a writer, not a Real Estate professional. She's not out there working the field. I will, however, give her credit for writing the following, in her Housing -- just cool or cold?... article on Sunday, February 19, 2006: "But, historically, January and February don't offer strong data for predicting trends. By spring and summer -- typically the strongest buying seasons -- it should be clear whether this winter's pronounced sales slowdown is here to stay or not and whether it will spread to prices."

In February, the buyers have increased, at least in the San Francisco Peninsula. I've experienced this first-hand as well as talk to my fellow agents. Open houses are well attended. Some open houses have 75+ groups attending on one weekend day. Demand is still very strong. There are still multiple offers, if the homes are marketed and priced properly. It's still a seller's market in this area. This doesn't mean it can't balance out.

The media sends out the wrong message by saying that the market has slowed in January. Most may read these articles and assume that it's still currently slow. I suggest taking what the media says about real estate, "with a grain of salt." Also, each area is different. That's why it's best to ask a full-time active trusted Realtor in your area.

The Kamali Team | Disclaimer | ReferredPro

I suggest reading "Are You Missing The Real Estate Boom?" by David Lereah

Real Estate prices can't go to zero, unless there was a reason for people to flee that area or the interest rates shot up suddenly and much higher than what we could imagine, whatever the size of that area. It's not likely that interest rates will shoot up quickly. So ask yourself if the people of the area you are thinking about have a reason to leave the area suddenly.

If they don't, then there will likely be no real estate bubble in that area.

Real Estate is not a short term investment and it's not as liquid as stocks. Stocks can go to zero but it's EXTREMELY difficult for real estate to go to zero.

The real estate bubble scare has been brought upon by stock brokerages and/or the media since they are tied together or invest in each other. Don't buy into it.

Real Estate is a finite commodity. However, stock shares can be split forever it seems. Also real estate is unique, even if it's in the same complex, if a condo. Is each share of the same stock unique? No, one share of MSFT, for example, is exactly like another share of MSFT!

So in my opinion, yes real estate can drop by 10%, 15% or 20% but I wouldn't call it a bubble. The price will likely come back up in time, unless the area has been cursed forever. For less risk, buy in an area that's got potential, is near good schools, near shops, near transportation, has a good real estate history and near jobs.

My strongest suggestion if you are serious in buying is to speak to a good Realtor, (go to http://www.ReferredPro.com) to be referred to one, who can give you some guidance, especially since they work with lots of people in your shoes who are thinking the same thing and lots of others who are making money in real estate. Warning: friends don't necessarily give the best advice, even when they think they are.

If you want to read more about the "bubble" which does not exist, read the The Anti-Bubble Reports

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The advantages of buying are:

1. They stopped making land. It becomes increasingly scarce.
2. Real Estate is tax advantaged
3. Each piece of real estate is unique. The location is unique, the buildings on the land are unique.
4. If you own a place and rent it out, the tenants help pay your mortgage. You may use the piece of real estate to generate some kind of income.
5. Even if you don't rent it out, you property will likely appreciate over time, assuming the location has potential. Before you buy in your area you must ask yourself and a professional Realtor about different communities. You may buy something cheaper in a not so good area but may also have less potential for appreciation OR you may buy something in a good area that's more expensive but it may be worth your investment.

The first step I suggest is to find a good Realtor. I suggest http://www.ReferredPro.com

In my opinion, there are only certain disadvantages to buying:

1. You have to deal with a little risk but "no risk no gain"
2. You have to worry about maintenance items and costs yourself.
3. It may not be worth buying a house, if you aren't planning to hold onto it for at least 5 years.

Advantages to Renting are:

1. Don't have to worry about maintenance and repair costs.
2. You may be able to negotiate a short-term lease if you don't want to stay in it too long.
3. You don't have hardly any financial risk (maybe your deposit)

The Kamali Team | Disclaimer | ReferredPro

In my opinion, the best way to decide on a lender is to get referred to one by a good Realtor. Your ultimate goal for submitting an offer is for it to get accepted. If your Realtor writes up a good and clean offer for you but you don't have a strong Lender, your offer may be rejected.

Good Realtors choose to work with the right lenders to help their clients get what they want. Oftentimes Online lenders promise low rates but there may be hidden fees, and sometimes they are not able to fund the loan when it needs to be funded. E-Loan and Ditech have a bad reputation, especially in areas where buyers need to be more competitive to get their offer accepted.

So even though it's more convenient to work with an Online Lender, be sure to speak to your trusted Realtor first! Lenders who advertise excessively are not necessarily the best to work with.

The Kamali Team | Disclaimer | ReferredPro

Continue reading "Human Touch Vs Online Lenders"