Silicon Valley Real Estate Guide

When I began selling homes in Los Altos 15 years ago, a consumer’s knowledge of the Title Insurance product was relatively low.  Today, that level of knowledge isn’t much better.  What I have found is that the consumer assumes that the cost of title insurance is somehow fixed and rather than investigate, they take the recommendation of their agent.

Taking the recommendation of your agent is not a bad thing.  In fact, the consumer should rely on their agent.  After-all, that is (in part) why Seller’s hire a real estate professional in the first place (because we have experience and knowledge related to buying and selling residential real estate).  A problem can occur if the agent hasn’t investigated and compared the costs of title policies. 

Picture courtesy of  Title Insurance Panama

Since there are at least half a dozen title companies in Los Altos, how do agents choose a title company for their client?  More often than not, the title company is picked based on the relationship between the agent and title representative.   This can be good, but it also can be bad. 

As a Realtor, I want a title company to be responsive.  Having a good relationship with my title rep can make it easier to get things done for my client.  Conversely, if the agent hasn’t checked the fee structure out, the client may pay more for title insurance than necessary.

In Santa Clara County, the Seller pays the title and escrow fees, the Buyer pays the lender’s policy.  In San Mateo County, the buyer pays the title and escrow fees as well as the lender’s policy.  

I recommend consumers go to the California Land Title Association web site to get a better understanding of title insurance, to understand what is covered in a title policy and lastly, to compare the costs between the different title insurance providers. 

I did a quick comparison of title fees amongst Los Altos Title companies using using the CLTA’s Title Wizard.  I wanted to get an estimate as if I was a Seller of a single family home in Los Altos.  The other parameters that I used are below:

Purchase price - $1,750,000 

Long term rate - Haven’t purchased or re-financed in last 5 years

ALTA/CLTA Homeowner’s policy

THE RESULTS:

Cornerstone Title and First American Title were the least expensive at $3,291.00

Stewart Title was next at $3,370.00

Old Republic Title was next at $3,487.00

Fidelity National Title and Chicago Title were next at $3,775.00

North American Title was next at $4,268.00

Several of the companies are within 3-4%, but if you compare the lowest with the highest, there is almost a 30% difference ($977.00).  You can run this analysis as a buyer as well.  However the fee difference for a lender’s policy is minor.

Note: In an effort to disclose fully (that whole transparency thing), I have my real estate license housed at Coldwell Banker which has a financial interest in Cornerstone Title.  However, the analysis was done by a third party, the California Land Title Association which is not affiliated with Coldwell Banker (at least not that I’m aware of).

If you are buying and/or selling a home and want to save a little money on your title policy, a quick check online can help you understand the fees.  If it were me, I would contact the title company and have them give you a written estimate of the fees up front.  It could save you money in the long run.

At the Corner of Grant Road and Levin Road is a 15 acre property known lovingly as the “Pumpkin Patch.”  For years it was used as a small farm that grew fresh vegetables which were sold at the on site vegetable stand.  During the fall, the site was turned into a large pumpkin patch (hence it’s name) with small farm animals, hay bails and a train that took children amongst the thousands of pumpkins.  In December, the property was turned into a Christmas tree lot.  

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There may not be too many more opportunities to enjoy the fields of flowers at the Pumpkin Patch as Summerhill Homes is developing the 15 acre parcel into a 54-unit single family home subdivision. 

I go by this site almost daily.  Today, I decided to stop and smell the flowers (actually take pictures).  I hope you enjoy them as much as I did taking them.

Congratulations to the U.S. Men’s Water Polo team for bringing home the Silver medal in the 2008 Beijing Olympics.  Great Job!

Photo courtesy of USA Water Polo

Back in the late 90’s, I thought it was cool to be one of the few Los Altos Realtors to use software that “stitched” photos together to create “virtual tours” of my real estate listings.  Flash forward to today and I now can use Photosynth. 

Photosynth creates a futuristic 3-d experience with user submitted photos.  Could this service replace real estate virtual tours and/or ad pizzaz to listings that only use still photos?   Take a look and judge for yourself.

According to it’s website, Photosynth allows users to: 

“Imagine being able to share the places and things you love using the cinematic quality of a movie, the control of a video game, and the mind-blowing detail of the real world. With nothing more than a bunch of photos, Photosynth creates an amazing new experience.”

The process to create a “Synth” is fairly simple.  Take a bunch photos of your subject.  Note: the more photos one takes, the better the Synth.  Unfortunately, the more photos one takes, the longer the download time.  In fact, It took me awhile to begin the process because Photosynth’s server was overloaded.  

I took 37 photos of my living room fireplace and mantle.  As recommended in the instructional video, I took the photos from a variety of angles and zoom positions.   Once the photos were downloaded, the Synth was created.  Below is my Synth of my living room fireplace and mantle. 

Thanks to Galen Ward of Seattle’s Rain City Real Estate Guide for alerting me to this service.  For an additional viewpoint, read Marlow Harris’ post on 360Digest.  Note: because this is their “beta” version, Photosynth currently only runs on PC’s (XP and Vista).

Today was the first day of school for children in the Los Altos Elementary School District.  Last night my children seem extra amped in anticipation for today’s festivities.  Who will their classmate be?  Will they like their teacher?  Will there be any changes in their classrooms?  Will their mom (or in this case, dad) take those embarrassing pictures in front of the school (and their friends)?

The first day of school in our household revolves around making it a great day.  We ready their backpacks the night before and then its off bed early.  In the morning they are met with a great breakfast - hot pancakes and freshly squeezed O.J..  Their lunch-bags are stock with good food and a special “welcome back to school” treat.

With the kids ready to go, it’s picture time.  This year the kids didn’t put up much of a fight.  I guess they have finally accepted that it’s something they have to do.  We took two photos of each child on the front porch and it was off to school. 

My 8th grade son “long boarded” to Blach Junior High where he was greeted by the leadership class who gave each student brightly colored bead necklace’s.  As a Junior high student, he has requested that we don’t take him to school.  Apparently, its not cool to be seen with your parents on the first day of school.  In the eyes of middle schooler’s, all parents are officially Dorks! 

We walked my 5th grade daughter to Springer school and took more pictures of her in front of the Springer Star, a large mosaic star on the front of the multi-purpose room.   Over the years, many a Springer parent has taken their child’s photo with the Springer Star in the background.

Besides getting caught up with families that you haven’t seen since June, parents are asked to register for the variety of volunteer opportunities at school.  Do you want to help at the walk-a-thon?  Serve hot lunch?  Or be part of the technology group?  There are tables with sign up sheets awaiting your signature.  Los Altos schools are successful, in part, due to the hours that parents put in volunteering. 

I picked up our daughter from school and took her over to Blossom Valley Shopping Center for a frozen yogurt to see how her day went.  Her response, as she devoured her frozen cookie dough treat, was “it was good, Dad.”  That’s all I needed to hear. 

It will take a week or two to get everyone’s schedule dialed in, but for today, it was all about the kids. 

Los Altos has always been a very pet friendly city.  The annual Los Altos Pet Parade draws thousands of residents and non-residents alike to watch the many animals (and their owners) that live in and around our town.  I enjoy walking our dog to downtown in order to visit my office, get a cup of coffee from Peets or to pick up dinner.   For those of you visiting downtown with your dog, below is a map of some of the watering holes provided by our local merchants.   Enjoy and remember to always pick up after your dog.

Can you figure out the location of each water bowl based on its photo?  It’s sort of a treasure hunt for dogs.  Click on photo to enlarge.

Click on the icon to get the name and address of the merchant providing the water.

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There is a less than admorable side to the practice of real estate that involves agents “buying” listings.   Buying a listing is when a real estate agent artificially overvalues a seller’s home in an effort to convince the seller to list the home with him/her.  The scenario usually goes as follow.  Seller contacts three agents to interview about selling the home.  The agents provide the seller with a comparative marketing analysis (CMA) of the home detailing current listings, homes that are under contract and homes that have recently sold that are similar to the home in question.  Usually the information is taken from the local multiple Listing Service (MLS) and possibly county records.  The seller uses the CMA and the information contained in it as a foundation for pricing the home. 

Some of the strategies that I have seen agents use in order to buy a listing include (but not limited to): 

1. Not including lower priced yet similar comparable homes in the CMA
2. Overvalueing a feature(s) of the home in an attempt to make it appear that buyer demand for that feature is extremely high and worth more
3. Claiming to have special inside information about a home(s) under contract that shows an upward trend in the market.  

Why would an agent want an overpriced listing? 

Marketing homes can be an expensive undertaking.  Local print advertisements alone can burn up a marketing budget real quick.  However, the key to buying a listing is the agent’s belief that he/she can get the seller to reduce the list price quickly.  The quicker the reduction the better…for the listing agent.  

Another agent benefit is the collateral business that comes from having a listing.  An agent is likely to pick up one or more buyers and /or sellers from an open house, from a call off of a “for sale” sign or from a “contact for more information” widget on their web site/blog.  These contacts can lead to future business.  Just think, how many of you know someone who walked into an open house and bought that house?  Now think, how many of you know someone who found their real estate agent at an open house?  Food for thought,  many more people find their realtor through an open house than buy the home during an open house.

How agents buy listings!

I have seen agents take a listing and within one week reduce the price of the home by 10%.  The scenario usually goes as follows.  Marcia, the home seller, interviews three agents (Jan, Greg, and Peter).   Jan convinces homeowner Marcia that her beautiful Los Altos home (which really is a tear down) is worth $1,700,000.  Marcia is so delighted that she is going to get 10% more for her house than either Greg or Peter thought it was worth and signs an exclusive listing agreement with Jan.  Apparently both Greg and Peter don’t know and/or understand the Los Altos real estate market because they valued the home at around $1,550,000.

The house hits the market and the agent community view it on the Friday Broker’s tour of new listings.  The house is open both Saturday and Sunday.  Unfortunately, not many people outside of a few neighbors come through the open house.  The neighbors seem quite happy, hoping the home sells for close to its list price.  There is only one showing the entire week.  Marcia begins to wonder….has something gone wrong?  Why aren’t people looking at my house?  After all, Jan said it was so beautiful and well priced. 

Marcia should be thankful that she has Jan working for her because Jan aptly notices a sudden downward change in the Los Altos real estate market.  She calls Marcia and says “Marcia, Marcia, Marcia… the market has changed and we must drop the price or we’ll be chasing the market down.”  The next day the list price is reduced to $1,649,000.  Marcia is excited in anticipation that her home will now sell and she can move back to her childhood town of Santa Monica.

Unfortunately, things don’t go as planned.  The home still isn’t having any showings, yet the open house traffic seems good.  Jan is meeting lots of good buyers, unfortunately none of them are for Marcia’s house.  Jan talks to Marcia about another price adjustment.  Fortunately for Marcia, she is still ahead of the game compared to what Greg and Peter recommended.  The home continues to sit.  It is reduced several more times until the list price is now $1,498,000.  Marcia is getting frustrated, its been over two months and the home has had 4 price reductions.  Finally, Jan receives an offer from Alice.

The offer is for $1,435,000., Marcia is mad and even more frustrated and flat out emotionally spent.   When this all started, Marcia had dreams of vacationing in Hawaii before moving to southern California.  Now she is looking at selling the home for $115,000 less than what Greg and Peter thought it should have sold for.  Why was Alice’s offer so low?

Mike, Alice’s agent, tells Jan that Marcia’s home has become stale and stigmatized because it has been on the market for so long.  After all, the average days on the market for a home in Los Altos hovers around 25 days and Marcia’s house has been on the market for almost 3 times that.  In Alice’s mind (and every other buyer), something must be wrong with the home and its reflected in Alice’s offer.  Marcia counters the offer and the home eventually sells for $1,470,000.  

As a home seller, what can one learn from Marcia’s situation?

• Get the right data.  If the homes (ie. the data) used in an agent’s CMA is different, ask why?  Why was one home included and another excluded?  Ask how recent the information is?  Do the comps go back 3 months, 6 months, or a year?  Why?  Is the neighborhood real estate market going up, down or even?  What type of home is currently selling well?  Is it the remodeled 4-bedroom home or are there more buyers looking for tear-downs/lots?  Lastly, have the agent explain specifically how the subject house compares with the homes used in the CMA.  This can weed out agents who really haven’t seen the homes and don’t know the market.  It’s common sense, but the more detailed the information, the better you can rely on it.
• It’s the Marketing Plan that leads to a higher sales price!  Talk to each agent about what they bring to the table and how specifically that agent will market your home.  The agent should be able to provide you with information about where buyers are coming from (Hint…Online!) and how to market to them (again, hint…Online!).   The agent should be able to give you a likely time frame on how long the home will take to sell and provide you with a realistic number that you can expect at closing.  What pre-sale inspections should you get (if any) and why?  What should you do during showings?  Will the agent walk you through the mandatory disclosure documents and explain how to complete them? 
• Don’t hire an agent solely on their commission schedule.  What I have found is usually the agents who try to buy listings also are the first to reduce their fees.  The seller is told their home will sell for more and it will be cheaper for them to do it.  What seller wouldn’t want this scenario.  It looks like a win-win to the seller, but in reality it isn’t.  I’m not bashing agents who discount, but rather want the seller focus on the services provided, the agent’s track record and then the agent’s fees associated with providing their service.  
• Take a step back and view your home as a buyer.  One of the easiest things to do when analyzing the value of your home is to look at it from the perspective of a buyer.  When you bought your home, you looked at all the market comps to see where the home fit into the market.  Do the same as a seller and you’ll be more realistic and the results will be better. 

Seller’s need to do your homework, be knowledgeable, ask questions, be realistic and don’t let anyone paint a picture that doesn’t mesh with reality.

The Multiple Listing Service is our most efficient means to sell a home and the most reliable source of local real estate 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 101 single family homes for sale in Mountain View.  Of these, 35 are under contract.  That leaves us with 66 homes that are actively being market for sale on the MLS. 

Below is the listing and sales activity for single family homes in Mountain View for the first six months for each year since 2005.

As one can see, over the last four years, listings have averaged 233 and sales have averaged 151.  However, there continues to be a downward trend for both listings and sales.  In the first six months of 2008, the number of listings is right at its four year average (233).  The number of sales is off by approximately 24% over their four year averages.  How has this overall decline in sales affected Mountain View real estate values?

In a word (actually two words), not much!  The graph below depicts the year over year sales prices (first half of each year) for single family homes in Mountain View over the last four years.

As one can see, both the median and average sales prices have gone up until a slight drop for this year.  Although the year over year increases aren’t the large scale ones we saw from 1997-2000 or 2003-2005, they are trending in the right direction.   This year we have seen a higher percentage of entry level homes in Mountain view sold versus the higher end or west of El Camino Real homes.

An interesting footnote to these sales stats is the fact that the average sales price to list price ratio has also declined over the last four years.   In 2005,  The average sales price to list price ratio was 106.63%.  In 2006 it was 101.98%.   In 2007, 104.42% and in 2008, 100.77%. 

The first half of 2008 has not been as bad as many had predicted.  Although we have been fairly insulated from the problems associated with short sales and REO’s, we are seeing more of them in Mountain View, especially east of El Camino Real.  The on-going problem is finding lenders who aren’t afraid to loan money to qualified buyers. 

This year’s market will continue to be driven by the first time Mountain View home buyer and those who want to move up.  These are the two markets that appear to be the most active.  Short sales will continue to have a slight downward pressure on sales prices east of El Camino Real. 

We are seeing multiple offers on the few homes available west of El Camino Real and those neighborhoods that are within the Los Altos School District.   As always, pricing strategies  and how one prices one’s home for the market is extremely important.

Two days ago, Financial Title went boots up.  Late yesterday, the entire crew from the Los Altos Financial Title is back in business.  No, not with Financial title, but with Stewart Title.  Yep, Stewart Title has hired the good group at Financial Title and is opening up a new title office in Los Altos.  The address is not yet know, but you can either contact Jan Hannan at 650 269-4563 or Michelle Brown at 650 333-8227.  The Stewart Title office will be fully operational as of Monday 8/11/08.  Good luck with the new office.

My usual routine in the morning is to get up, let the dog out of her kennel and then check my e-mail.  This morning my e-mail had a shocker.  I received an e-mail from one of the Account Managers at the Los Altos Branch of Financial Title Company indicating that Financial Title Company was closing its doors effective immediately.  Not just the Los Altos branch, but the whole company.  Go to their website and you get this.

My first thought was “here we go again” because the Campbell based Alliance Title company had just shut it’s doors in December 2007.  Financial Title had a great office in Los Altos and was the largest title company in Silicon Valley.   The two escrow officers (and their assistants) who I have worked with over the years were very good and had a sarcastic bent to them, which I enjoyed.  It’s really sad to see the office close especially when you know the people involved so well.

Anyone who has an escrow with Financial Title will now have that escrow transferred to the First American Title office located at 161 South San Antonio Road.  Their phone number is 650 941-3523.  Note: First American Title has been the underwriter for all of Financial Title’s escrows.  An e-mail late today gives more information for those of you who have escrows with Financial Title:

• First American Title has secured the trust funds from all of the Financial Title Escrows
• There is a First American representative today in each of the local Financial Title offices.  They are going through each of the open escrow files and if the escrow has trust funds that have been deposited, they are contacting the clients to let them know the status of the trust funds.  They will also be finding out it the client’s want to keep the escrow with First American Title or move it to a different title company.
• First American has set up a general information number at (925) 249-2819 for general questions.  However, at this time, they do not have information about specific escrows.  Questions about specific escrows should be available in a few days.

Stay tuned.