Boosting Valuations When it Comes to Selling

On Thursday, Bloomberg’s online news service confirmed what we had been hearing in more general terms: “Sales of previously owned U.S. homes climbed more than forecast in May…and prices jumped, indicating more progress for residential real estate.” Agents here in Berkeley would also not have been surprised at the national surge in selling prices “by the most since October 2005”. If you were already inclined to sell your own Bay Area home, it looks more and more as if this summer will be a propitious time to jump on the opportunity. 

As Realtors gear up to maximize the market’s improvement, homeowners are also weighing some of the more popular alternatives for boosting valuations when it comes to selling — 

• Prospective homebuyers are increasingly energy savvy, so when new appliances need to be updated prior to sale, the more energy-efficient they are, the more worth highlighting they will be. Us "Green-Minded" real estate agents know how to emphasize a property’s ‘green’ attributes.  
• If you have an attic or a basement that is currently serving little purpose, conversion can pay off. Basements are often the more affordable option since they call for little structural remodeling. Conversions can be into a games room, office, or utility area. Attics are often best converted to bedrooms or office space (or at least staged to suggest the possibility
• Landscaping including features like decks can be a huge selling point. If you are prepared to engage in a little DIY, adding a deck can be among the most cost-effective of improvements. According to HGTV, the cost of a professionally built deck starts at about $15 per square foot, with more elaborate installations featuring costly hardwoods or composite materials running closer to $35.  

Even if you do not intend to sell, a little extra money invested in your home may be a dollar-wise idea. Thoughtful investments can enrich your own living experience AND attract higher prices when the time comes to move on. If you’re looking for a real estate agent call me today to go over other improvement ideas.

By Gina Odom, Realtor : 415.307.1423

Bill Before the House May Make Houses Harder to Afford

From my in-box today:

“A draft bill to be discussed at a House subcommittee hearing today would raise the minimum down payment to 5% and would also make a significant cut to the maximum size of loans backed by FHA in many parts of the country. The maximum FHA loan size in expensive parts of the country is already scheduled to go to $625,500 from $729,750 on Oct. 1. However, in areas where home prices are more modest, that limit is scheduled to fall as low as $271,050. The bill would allow those limits to fall even more—to 125% of a county’s median home price.” -Russell Doi, RPA Mortgage

These changes will be a hurdle for many buyers. Buyers with great cash flow but low assets may find themselves pushed out of the market. Buyers basing their price range on the current $729,750 loan limit may have to lower their sights by more than $100,000.

Buyers searching in the $800,000 price range and looking to use the maximum loan, your window of opportunity is closing. All buyers with low down payments should consider buying now. With buyer-friendly legislation, interest rates below 5% and home prices relatively low, now could be the best time to make the move.

This may also create a temporary market surge for sellers who can come quickly to the market, as buyers look to capitalize on the existing rules. Particularly if your home is in a price range that benefits from the large conforming loan limit (usually properties over $800,000) and for homes in the "starter" price range (under $500,000 in this area) where down payments tend to by lowest. Houses sell for the highest dollar amount when they appeal to the largest amount of buyers. The proposed changes are enough to restrict affordability and move some currently active buyers to the sidelines.

Can You Have Your Cake and Eat It Too?

by Uma Moldenhawer
(the following is a summary of an article posted by the Hills New Group on May 13, 2011)

A real estate buyer often needs to prioritize between 2 primary attributes – location and features of the property. You have already heard by now that Location, Location and Location (has to be said 3 times for max effect!) is all that matters in real estate. There is proven value in that old saying. While property features (such as the style of the property, number of bedrooms, bathrooms, kitchen size…) often can be changed, convenience and desirability of a location can’t be easily modified, and definitely not over a short period of time.

Buyers don’t always understand the trade-offs associated with prioritizing a great location. We have had buyers say, “Even though we are willing to spend 700K on a home in the Berkeley area, we still feel like we are settling for it rather than getting our perfect home.” A Berkeley location often dictates higher prices and homes that are smaller and older when compared to most of the country. So, how do you avoid compromise? With a little imagination, you can have your cake and eat it too. Think creatively about how to manipulate property features and make a house your own sweet home.

We walk our clients through all the possible rearrangements and renovations for the subject property, to come to a conclusion on whether this is the right property or not. Sometimes fulfilling a dream is more than just finding the right house. It often requires helping buyers visualize some amount of remodeling and rearrangement. Your dreams are unique, so it is difficult to find exactly what you are looking for in the existing inventory of homes. This means either a compromise or a willingness to make changes: Be it a new paint color, a new deck or knocking out a couple walls. I believe that you should compromises only if the changes are not feasible, do not make sense economically or if you do not want to deal with the hassle.

“Think of the possibilities, not just what it is today. This is our philosophy when evaluating the features of the property – think about the possibilities and if that still doesn’t meet your needs, let it go.”

If creative visualization fails, it may be worth compromising a bit on location, especially if it is determined that a particular feature is of greater importance. Recently, we held an open house in Albany, where Mamood and I met a sweet young couple who told us that they were burnt out from searching for a home. They had been out every weekend, and it had already been 4 months since they started their search! When we asked them what feature was most important, their number one criterion was “large lot size” with the ability to garden. I couldn’t stop myself from saying, “then why are you looking in Albany where most of the lots are 5,000 square feet or smaller? You should be looking in Berkeley or Kensington.” They were tiring themselves out by looking in the wrong location. And remember to bring your creativity: If there is concrete or a deck in the wrong place, it can be removed.

For the blueberry cake (pictured above) recipe click here.

Breaking Down Berkeley's Median Home Price Statistics.

In our last post we provided the Median Home Prices for Alameda and Contra Costa Counties. We also stated that:

This is not an automatic indication of the depreciation of your individual home. Our area contains many unique geographic pockets and real estate is still acting in a hyper-local manner.

This statement is more profound and dramatic than our previous post illustrates. In this post we have taken two Berkeley zip codes, 94702 and 94708, and charted a graph for each zip code's year performance.

(Click on the graphs for a larger view)

These two zip codes alone represent a 64 point statistical spread. The graphs stress that this area does not lend itself to blanket statements about "the current market." The city statistics can not accurately depict values for individual neighborhoods. National statistics and trends are even less telling. Talk to your Realtor (or one of Berkeley Hills Realty's qualified agents) to get a better understanding of this hyper-local phenomenon.

Market Update for East Bay Real Estate

by Tracy Sichterman

One of the parents at my daughter's school just asked me; "Are houses selling better this year?"

For most, the answer is yes. Houses that are priced well are selling quickly. Some with multiple offers. One house in Albany, at 1700 Sonoma, just closed for 124% of its asking price. It was listed for $625,000 and just closed for $777,000. This scenario is the result of optimistic buyers entering our Bay Area market-- which doesn't have enough inventory to meet the demand. As reported by our agents, activity at the open houses is also up significantly.

That said, there is a bit of a glitch in the high end market. As blogged about on Homegirl, by Tracey Taylor, a home in the Claremont district of Berkeley, at 2970 Avalon Avenue, just sold for 29% less than the original asking price. Truthfully, the original asking price of $2,950,000 may have been ambitious. The home closed last month for $2,100,000.

There are good reasons for the hurdles in the high end market. Jumbo lending is challenging-- post mortgage meltdown. In addition, many who would have chosen to "move-up' are finding that transition more difficult. In the past, bridge loans would have helped them access to their current home's equity. Now, homeowners are looking at the prospect of selling first to get the "cash in hand." Unfortunatly, this option forces them back into the rental market while they look to buy the new home. Many can not manage the extra move plus additional hassles this would require. This may be one reason our inventory is so low.

All told, buyers are still looking for a bargain. We have experienced several multiple offer situations where the seller did not get their full asking price. In the past competition from multiple offers would almost automatically ensure a sales price higher than the current list price. This is not always true today. There does seem to be a trend for these concervative buyers. The homes with low offers tend to have been on the market for longer than the traditionally short listing period. Price reductions may have brought houses within reach of the right buyers, but then the days on the market have kept those buyers acting cautiously. We also see many good homes that seem to miss the radar of initial competition. Deals are spotty with more competition in the market place... but the deals are still out there.