Q. I just purchased a 900 sq. ft. 2 bedroom, 1 bath home back in April near Los Angeles. I am considering either adding an additional full bathroom off the master bedroom and/or enclosing the patio to make a sun room. My questions are: 1. What is the better addition to make in terms of resale value, resale potential, return on investment? 2. Do you think the investment is worth it in terms of resale value, resale potential, and return on investment? I’m curious if a 2 BR, 2 BATH is much more marketable than a 2BR, 1BATH? I am also considering adding an entire master suite, complete with full bedroom and bath, making the home a 3+2 but not sure if the extra expense would be justified in terms of return on investment. If you had the money for any of these additions, which one(s) would you do? Or should I just leave the property as-is? First, your return is dependent on a several factors: 1.) Will adding rooms/bathrooms be consistent with neighborhood? In other words, if you build a mansion in the middle of 2BR/1BA bungalows, you will never get the return as if you were building a mansion along Bel Air Avenue. So make sure you have input from a local real estate agent in regards to the neighborhood consistency, value, and general appreciation predictions. Is this an up and coming neighborhood? Are other owners remodeling? etc. 2.) Additions should flow well with the rest of the house. Quirky add ons ( cramming a bath in a closet etc) do not get the return that a well planned, within flow of the current floor plan will. Make sure it can be done in a way that improves the floor plan and not hinders it. 3.) Bedrooms in…
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Q. We’ve sold our house. We have 30 days rent back. We would like to ask for 4-5 months rent back extension due to the fact we have not bought a house yet. Our agent (seller’s agent) told us that the bank wont allow the buyers to rent out more than 30 days because this will ruin the buyers loan. But lots of our friends had stayed at their houses for 4-6 months after they closed the escrow. We were told that it can be done as long as both buyers and sellers agree. The bank should not be an issue. Can seller rent back more than 30 days after close the escrow by law? If there is a contract for rent back (and there should be) the buyer’s lender is privvy to it and can apply its own rules (each lender – potentially different rules). I have seen some lenders only allow a 30 day rent back and I have seen others only allow a 60 day rent back. Nothing more. In past times, it was not as big of an issue but things have changed and if the borrower signed a loan document that states it is a primary residence, then the lender wants to see them occupy the property as their primary residence. With all that said, you don’t know until you ask. If the buyer’s are in agreement, write it up and see if the lender says anything. I am not sure where you are in the process but if the loan is already approved it may delay the timeline for closing. Got a real estate question? Talk to CJ! Tags: Talk to CJ
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Q. How is the Brickyard Condo complex in San Jose area? I like this complex design a lot. The units have some unique features and different layouts, not so cookie cutter style. I think it is a great space with community rooms available for residents that promote the kind of “live/work” idea. It is a secured, gated garage, and internal entry so that certainly provides a level of security. The challenge to me is the economic issues have not allowed the neighborhood to change with the Brickyard and unfortunately, many of the units are under water. The last time I checked there were legal action being taken against the HOA and builder. Either one of these issues would prevent a loan being used to purchase unless it was a private lender (hard money lender). The REO lenders may provide financing. If you want to look at crime in the area and general downtown area – check out http://www.crimereports.com Got a real estate question? Talk to CJ! Tags: Talk to CJ
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Q. We’re buying a short sale. There have been differing points of view from the selling and buying agents, greatly impacting our contingency timeframe. If anyone can offer insight, that would be great. The California Association of Realtors Short Sale addendum form leaves some ambiguity in regards to “acceptance” of a short sale approval is conveyed. The short sale addendum simply states the approval letter needs to be delivered to the buyer. However, the listing agent sending you a copy is not confirmation of acceptance of the short sale terms by the seller unless it is signed by the seller. Different banks issue different letters. Some require a specific signature agreeing to the terms by the sellers and acknowledgement from the buyer. Some don’t have a signature and simply state the terms of the short sale acceptance. Unless your agent specified in your contract or the short sale addendum that the delivery required seller’s signature, it would not need to be signed by the seller to meet the standard wording in the short sale addendum. An attorney might argue why would the seller deliver the letter if they weren’t in agreement but many times it is the listing agent passing on the approval letter to get the timeline going. In your case, because the seller was obtaining counsel from their attorney, it appears they did not accept it until the 8th. The bottom line, unless the stipulation of seller signature upon short sale approval was included in the contract/addendum you may have a hard time enforcing the 8th. Ultimately, all want to close the deal. If you can convince the agent and seller that a longer contingency will not impact the actual closing (what most are worried about because of the approval date expiration) then you may very well be…
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Q. I am considering buying an REO foreclosure home. Do REO foreclosure homes sell for less than regular homes? The answer is YES, in general. Listing agents for banks tend to price aggressively and lower the price consistently until they find a solid offer. The more important strategy is how you and your agent will manage the offer if there are multiple offers. You have to be clear on what you see as the “value” of the home and set your limits clearly with the help of your agent. I have seen buyers get into bidding wars for many emotional reasons and end up paying more for the home then they might ought have. But if they are happy? Then does it matter? Whether it is a short sale or REO, patience and the clearest view of value wins out. The market is very dynamic and it takes homework, and a strong negotiator, on your behalf, from your agent. I would also add that if you find a private owner with equity, you can many times get a lot more for your dollar (repairs, closing cost paid, etc). One of the first priorities to establish – are you looking for a deal or a home? From there, go shopping. You may change your mind either way about what is ultimately important. I believe there is a lot of pressure on buyers when their friends ask about their recent home purchase. Everyone wants to be able to come off as a savvy purchaser, taking advantage of a down market, and reply, “Yeh, I got this great house for X dollars under market!” It is possible, but not always true. Got a real estate question? Talk to CJ! Tags: Talk to CJ
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Q. Campbell has evolved as an amazing small town, there are still quite a few Fixer Uppers out there and am wondering if now is a good time to invest a bit of sweat equity? The answer will depend on the actual property. In general, Campbell is a good strong neighborhood. The return will depend on crunching the numbers. Make sure you obtain all the right inspections on the property you are interested in. In this market, many times the seller can be coaxed into paying for all the inspections. Once you know what the repairs are, touch base with a Realtor (or three) to find out the current market value of the home and neighborhood. Most investors look for properties they can get for 30-50% under market value. Knowing the repairs needed will help you negotiate the price down to the “investment price”. If you are planning on renting the property, make sure you take a peek at Craigslist.org and local papers to see what rents are running. Add in 2-10% maintenance/management costs and make sure the rent can cover this with some additional cash flow. The CAP rate (http://en.wikipedia.org/wiki/Capitalization_rate) is what normally tells the investor whether or not this is a go-no-go. Many times, California properties become long term investments as the CAP rates tend to be pretty low. Look for properties that have been on the market for a long time. The ones that have been noted on the MLS as pending and then back on the market tend to have motivated sellers. Getting your price may take patience, but it is a big key to getting your money back. Finally, the cost of repairs depends on how much you can do yourself and how much you have to hire professionals. Be careful with items that require…
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Q. We are looking to buy a home in good school districts and we have Cupertino/Fremont in mind. 1. Can some one explain the pros/cons of buying in Cupertino vs. Fremont? 2. With very good api scores in Fremont, why are the home prices way less than Cupertino area? Will they appreciate in the future? Also, I have noticed that town homes in Rivermark are expensive than SFR in Fremont good school areas. Is it because of the Rivermark homes being new vs Fremont homes being old? If so, Cupertino even though they are 40 year old homes they are still priced more than the Fremont homes. Why is that? a) Is demand only factor which drives prices higher in Cupertino? Demand is definitely a key component. Commute to tech hub of Apple, HP and others makes it a highly desirable area as well of course, recognized schools. Many relocation clients simply go to Cupertino first because if they are not familiar with the area, they know they have a short commute and great schools. IMHO, Cupertino itself is one of the best examples of urban sprawl in our area. Not very walkable, lots of franchise based food and retail (although more ethnic diverse restaurants are making headway) and triangulated by three highways. But, based on Apple’s recent decision to build a new campus I don’t see the desire for Cupertino going away anytime soon. b) Are there any factors other than shorter commute and demand which differentiates East bay and peninsula Prestige? Commute to San Francisco (although that is a perception not reality because of East Side Bart). More greenery? East Hills are nice but brown most of the time. West Hills provide more green feel. c) Any other major factors which differentiates peninsula from East Bay living Both…
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Q. Is there any chance of selling a home in east San Jose (between Story and Tully of Mclaughlin) and getting anything for it? There is no doubt the East Side is suffering in this market. There are a lot of short sales and foreclosures in the area you mention and that has had a huge effect on prices in the last 6 months. If you take a look at ForeclosureRadar.com you can see up to 20 houses around your location that are in pre-foreclosure or foreclosure. Unfortunately, foreclosures will be playing the biggest role in prices for next period of time. Whether or not you can get the money you owe out of the home in this market is going to depend on the actual street and surrounding neighborhood, the presentation of the home, and of course -how much you owe. If you purchased your home after 2004 it will be difficult to get the monies back. Most important is to sit down with a couple of Realtors and see how they value the house. The only way to know what your house is really worth is to talk to professionals in the area. I would be glad to help you evaluate the home. Got a real estate question? Talk to CJ! Tags: Talk to CJ
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Q. I had a buyer ask for money to repair and or clean things on the day of the walk through. He threatened to stop the closing if I didn’t open my wallet. I called his bluff—I was sick of this guy as he’d already gotten a great deal—and the closing went through. My lawyer and realtor provided no real help other than to ask me if I was willing to let the deal fall through over a few hundred dollars. What should a realtor and lawyer really be doing to guide their client through this kind of scenario? Recently, I represented a seller and the buyer kept coming back for more and more request after getting a great deal on the house. The buyer went as far as asking for “all debris to be cleaned out from under the crawl space”. Now the crawl space was not in horrible or even cluttered but had a couple of bits of plumbing supplies underneath one area. At first when the buyer would come back with a request and my client would ask me what she should do , I presented the scenarios as most agents do. It is a buyer’s market, you have a million dollar deal on the table, do you want to risk that over a $150 of clean up? However, after the 3rd non-standard request, I told my seller that she had every right to be frustrated and the buyer was being unreasonable and ultimately the decision was hers to say yes or no. The seller refused the addendum and the contract was canceled. From the moment the contract seemed stinky, I was on the phone keeping up with other parties that were interested in the house but had not brought an offer forward. I was able to…
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Q. How do you speed up a short sale? I am already pre-qualified to the price the seller is asking. What is the average waiting period on a short sale? So many variables. I once had an approval from lender, and they WOULD NOT email/fax etc me the letter insisting that it would be coming in the mail to my client. It took 21 days to get the letter! Really! On the other hand, I had another short sale approval letter in hand 2 days after the offer was presented. The variables? The buyer’s agent The seller’ agent The negotiator(s) (How many loans?) The processor(s) The investor(s) The Mortgage Insurance company (if applicable) The Escrow company The method of communication (email/fax/equator/slow boat…) The weather The stars… I am being sarcastic but there is no definitive answer. Even if it is the same lender as last time, I have no way of predicting. I simply stay on top of it and make sure it happens as fast as the list above allows it. Got a real estate question? Talk to CJ! Tags: Talk to CJ
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Q. Do home prices generally rise in the spring months? If so, when is the best time to sell if you are not in a rush? It is an ‘ole real estate tale to say that there are some months better to sell than others. Maybe there was a time when predictability ruled the market place but not anymore. I have looked at the stats for the last 5 years, the last 3 years and here are the market realities that effect home sales: 1.) Homes sell – when there are a lot of homes on the market (inventory high). 2.) Homes sell – when interest rates are low and more when rates are low AND inventory is high 3.) Homes sell – when government incentives create demand (tax incentives) In regards to “seasonality” and prices, we are not seeing a trend consistent enough in this market to target a selling period. I would look at your specific neighborhood and run the numbers to see if I could find a trend but speaking generally about the San Jose area, it is not the time of the year but the market dynamics and inventory being sold that is driving average sales prices up or down. More than the month, the drivers for best price are: 1.) Move in ready – no deferred maintenance and no big ticket repairs 2.) School districts – not only for family demand but for re-sale 3.) Consistency in the neighborhood – pride of ownership throughout the area Bonus points for: 1.) Updated baths and kitchens 2.) Hardwood floors 3.) Copper plumbing and dual paned windows 4.) Open Floor plan 5.) Shortest commute to tech hub 6.) Convenience to shopping, parks,…coffee Usually, holidays are a slow time simply because only those who have to sell will interrupt…
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Question: I am considering buying a nice home on a half-acre lot in a high-end California subdivision. All homes in this subdivision are built on half-acre lots. However, this subject home is special in that there is a designated non-buildable, open-space area of 8 acres across the street from this house (still located within the same subdivision). If I buy this house, title to these non-buildable 8 acres will transfer along with the house. Here are some of my questions, if you don’t mind helping me sort this out: 1. Are there any advantages to owning these “special” 8 acres of land in this subdivision if you cannot build on them? 2. What can you do with these 8 acres, if anything? 3. Can this increase my tax liability (now or in the future), or is tax liability based purely on the property’s purchase price? 4. Are there other liabilities that I should consider but haven’t thought of? 5. Is there any value to this non-buildable land? 6. I have considered creating a community garden or public project of that sort. If possible, are there any tax advantages that I can gain from doing this? Are there any arrangements that I can make for public benefit in order to receive a tax benefit in return? 7. Basically, is this vacant land more likely to be a liability (e.g., clearing brushfire shrubs & maintenance) than it is to be an asset (value)? Answer: Great questions and you have thought of many of the right considerations. 1.) The best advantage of owning “open space” is not having a view of anything but open space. If behind this open space there is a warehouse and therefore even though you have have open space you are still looking at a warehouse in the distance;…
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