Rainmaker Properties

One of the most difficult things for home sellers to accept when pricing their Silicon Valley home is that they may need to compromise on their asking price when they list and negotiate the sale of their home.

Proper pricing, always a critical component in real estate, and one of the most critical insights a real estate agent — whether in Mountain View, Los Altos, or beyond — can provide, has become especially important today because buyers are cautious and the market is in flux.

If fact, inflexibility can lead to missed opportunities. I’ve been working with home sellers who are facing just such a situation.

After analyzing the local market and the homeowners’ goals, I thought a property in Mountain View should be listed at $1.2 million, but the owners insisted that we start at $1.35 million.

Within six weeks, we got an offer for $1,170,000. The prospective buyer was solid and I thought the offer was strong. The homeowners (lifelong Mountain View homeowners) had nearly paid off the mortgage, so they would be walking away with a respectable profit. Yet, they rejected the offer immediately. This all happened before the recent national financial crisis.

After the house sat on the market and we received no additional offers, we lowered the price to $1.3 million for six weeks. Unfortunately, this pricing strategy yielded not one offer.

We then dropped it to $1.25 million and finally received an offer for $1.15 million. The owners wouldn’t accept that price and decided to rent the house. Three applicants applied and we found one tenant that would commit to a lease. But the owners then decided to go back and try negotiating with the prospective buyer who had made the $1.15-million offer.

Eventually, both possible deals—the one with the home buyer and the prospective tenant—fell apart. The homeowners were left with no prospects for a rental and no sale.

They’re now facing a market that has gotten more difficult because of the stock market crash and the ensuing credit crunch.

Elizabeth Weintraub of About.com offers a list of pricing techniques that this owner should have heeded, but this situation also illustrates several key points to consider when you decide to sell:

1. Consult a professional REALTOR®, a real estate agent who is a member of the local association of REALTORS®, who knows the local market, for example the Silicon Valley Association of REALTORS®.  Follow the person’s advice. He or she is best prepared to properly price a property.

2. Do your own due diligence. You can find insight on pricing, how the local market is performing, and how long it typically takes to sell a property in your neighborhood by going online.

3. Be realistic when you get an offer. The emotional response is to reject a disappointing offer from the get-go. But you can negotiate and work toward a more favorable price. It’s important not to get too emotionally involved in the deal.

4. Know that in a declining market the offers may not get better. You have to really weigh your financial situation and how long you’re willing to wait for that perfect price to come in. After all, you’re likely still making money, just not as much as you once thought you would. Can you afford to put your plans on hold? If you reject an offer in hand, are you willing to risk getting an even lower offer next time?

5. You hired your REALTOR® because you had confidence in his or her abilities and the market analysis that the person presented to you. Remember that the market decides what price a house is worth, not the REALTOR®. If the listing agreement expires and you and the REALTOR® part ways, you’ll have to start from ground zero with a new REALTOR®. And that new person, after weighing current conditions, may suggest an even lower starting price than the offers you’ve already received.

6. By making impulsive decisions, you could lose valuable time and miss out on solid offers.

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At my recent open house in downtown Mountain View, I was recently chatting with a real estate agent that earlier this year had been interested in joining my team, and she surprised me. I happened to ask whether she prepared brokers open houses for her two Mountain View listings, and she said, “What’s that?” Her answer was another reminder that not all real estate agents are the same.

A “brokers open,” as we Realtors call them, is an open house exclusively for brokers that takes place right after a home is listed but usually before buyers see the property. Brokers opens are an important first step in selling a home because they not only generate interest for a listing within the Realtor community, they’re also a great way to get feedback on listings.

Of course, brokers opens are useless unless brokers attend. I always have catered food at my brokers opens because the rumors are true—Realtors are always hungry, and they love free stuff. Sounds funny, but it works. I recently held a broker’s open in a great neighborhood in Mountain View bordering Los Altos area, and 30 agents come by. At another in a great downtown Mountain View location, 20 agents stopped in. And at a broker’s open in Sunnyvale, 10 agents attended. Those stats say something about which Silicon Valley markets are most active. Mountain View and Los Altos aren’t too affected by the economy, but some areas of Sunnyvale is seeing a slight slowdown in activity today.

The Washington Post has a great article commenting on how during a real estate downturn, the focus for selling homes shifts back to traditional marketing to brokers and real estate agents.

Once they’re there, real estate agents’ feedback at the brokers open house can be very helpful. I always ask, “What would you recommend with this listing?” I’ve had brokers suggest that I stage a certain room and even mention that the bathroom smelled funny (That was particularly helpful since I don’t have a great sense of smell).

I don’t change my marketing based on every suggestion. But if I get several remarks on an issue, it’s probably something I need to address. For example, if a few brokers tell me I’ve priced the property well, that reinforces my confidence. But if three or four tell me the listing is overpriced, I’ll discuss those comments with my sellers.

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When you hear that buyers are purchasing bank-owned properties because they can rent them for more than the mortgage, it’s time to shake off the idea of a “bad market” and start looking for the excellent opportunities this market offers.

Skeptical? Hear me out. A two-bedroom home in foreclosure near a state university recently sold for an amount that allows the buyers to break even by renting it out. And in Sacramento, a four-bedroom home sold for less than $100,000. The buyers are renting it out for $750 a month, which essentially covers the mortgage.

You’ve heard me say it before — now is the time to buy. But do it with your eyes wide open by understanding the difference between, and the complexities of, short sales and foreclosed properties (often called REO based on bank terminology of “real-estate-owned” properties).

In a short sale, sellers who owe more on their mortgage than their home is now worth put their home on the market. If they receive an offer, they ask the bank to accept the less-than-mortgage-amount price and release them from the obligation to pay the difference.

You can find short sales today, but to complete the purchase, you’ll need an experienced agent to guide you through the complex and delay-plagued process. It may take weeks or months for the bank to respond to your offer, and even then the final answer may be a no. So start looking, but steel yourself for banks to be sticklers and even deal-breakers.

The benefit of investing in REO properties is that you know you’ll receive a timely response from the bank because no lender wants to own a large portfolio of REO. On a recent sale, the bank accepted my client’s offer within two hours. On another property in Santa Clara, the lender responded to my client’s offer within two weeks.

Banks are pushing hard to get rid of their foreclosed properties. They’re not giving them away, but they often list them at below market price. For example, I recently helped a buyer acquire a foreclosed property that sold for $780,000 in 2005. My client purchased it for $655,000.

Investing today is simply smart. But it takes patience and a good agent to help you find—and close—those great deals.

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Sunnyvale reisdents are invited to come dispose of out-dated paper documents to prevent identity theft and free up space in their homes.

The City of Sunnyvale is sponsoring this papershredding event.  No appointment needed and it’s free of charge!

Bring your boxes or bags of personal paper records and files for on-site shredding by a professional document management company.  For more infomation, call the City of Sunnyvale Recycling Program at (408) 730-7262.

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Silicon Valley has always been known for being at the forefront of technology.  Residential real estate listings should not be marketed any different.

In real estate marketing, 360 degree virtual tours and slide shows are out.  Real video is in.

With some help, I’ve been playing around with various types of video marketing for our team and our listings.

Our first video a YouTube video using an unorthodox and unique approach in explaining why Silicon Valley residents should choose to work with Rainmaker Properties when making a decision to buy or sell real estate.

And for our recent listing at 1934 Limetree Lane in Mountain View, we did a complete video tour of the house and neighborhood.  Be nice, this was our first try at video marketing!

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I spoke with Craig Skylar of KRON 4 News about today’s big news of the government bail out of mortgage giants Freddie Mac and Fannie Mae and what the effects this has on Silicon Valley residents trying to enter into the real estate market.

With the news of bailout, stocks ended the day on a good note. With consumer confidence up and stability with the government stepping in to help Fannie Mae and Freddie Mac, it will be interesting to see the long term effects this will have own home ownership here in Silicon Valley.

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Just last week in Cupertino, I spoke with KRON4’s Kate Thompson about Silicon Valley schools and the impact they have on the local real estate market.

I feel blessed that this month I’ve had some great opportunities to share my views in the mainstream media.

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One of the non-profits Rainmaker Properties supports is Habitat for Humanity. The local Peninsula Habitat for Humanity recently merged with the San Francisco Chapter to create the Habitat for Humanity Greater San Francisco chapter. Their mission continues to be to provide affordable housing and home ownership in the Bay Area by working with families and the community.

Habitat for Humanity Greater San Francisco is proud to present the Eichler Home Tour on Saturday, September 6, 2008. This special self-guided tour will offer design enthusiasts and the general public a look into the world of Eichler residences in Palo Alto. All proceeds from the event will support Habitat Greater San Francisco’s efforts to build homes and hope in Marin, San Francisco and the Peninsula.

The tour will begin at 10 AM at the Eichler Swim and Tennis Club at 3539 Louis Road in Palo Alto. Tickets are $40 and are ta deductible.

If you’re not familiar with the Eichler, I recently sold one in Sunnyvale and talk a little about the background of these highly desirable mid-century moderns.

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Modern architecture buffs will be familiar with the mid-century modern homes built by Joseph Eichler between 1949 and 1974. The properties, aimed at middle-class buyers of the time, have helped to define what’s known as California modern architecture.

The homes were especially unusual at the time because typical features included low or flat roofs, clean geometric lines, a somewhat spare sensibility, an open floor plan and lots of natural lighting that came from skylights and floor-to-ceiling windows. Another signature was a design that de-emphasized the delineation between the indoors and the outdoors. Views to the outdoors were always accessible and part of daily life.

I recently sold an Eichler house at 759 Pear Avenue in Sunnyvale near Cumberland Elementary School, and were pleased to see that Eichlers grab lots of attention when they go on the market. Even though there were about 11,000 Eichler homes built in Northern California and Southern California, they’re still considered a unique commodity and can command top dollar. The one I sold, in addition to being an Eichler, also was walking distance to the top rated Cumberland Elementary School in Sunnyvale. This Pear Avenue Eichler hadn’t been updated since the 70’s and definitely was a fixer-upper that needed a little TLC. We used our unique selling system to market the property, it generated multiple offers and sold for $60,000 above the asking price. And another Eichler, situated in Sunnyvale’s West Valley Elementary School district of Cupertino, recently sold for an eye-popping $227,000 over the asking price!

Later, I’ll talk more about the pricing strategy we used for the house and how the approach can help get more attention and offers if you do have a truly unusual property that you want to market.

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Had a great opportunity to chat and meet with KRON Channel 4 News’ Kate Thompson about Cupertino and Sunnyvale schools and the impact they have on Silicon Valley real estate.

KRON Channel 4 News and Kate Thompson have a weekly real estate report tracking the local and regional bay area real estate market. Kate contacted us at 1SiliconValley, the Silicon Valley Real Estate Blog that I co-author with blogger and marketing expert Steve Leung. In July, 1SiliconValley.com was named by the SF Registry Magazine as one of Silicon Valley’s best real estate blogs.

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To paraphrase the famous line about voting in Chicago: Check real estate listings early and often. Perseverance can be the key to helping clients be at the right place at the right time to get a great value—even in high-priced zip codes.

Here’s how that rule of thumb recently played out for my client. We had been viewing homes in Redwood City for quite some time and came across five brand new luxury homes in a gated community. We were in the beginning stages of the client’s search, and the homes were priced at the high $2 million to the low $3 million mark. Though we liked the house, we had just begun the home search and were not familiar yet with the current market inventory and pricing. I suggested the client wait until the first of the five homes sold so that we could get a better handle on their value.

As we viewed other homes, I kept checking the MLS for the status of those five trophy homes. One eventually showed that a sale was pending and was scheduled to close within a few weeks. As the deadline for the close of escrow approached and then passed, I checked again and again. When the listing seemed permanently stalled, I started digging—and learned the developer had gone under. The homes foreclosed and were now bank owned.

I immediately called my client, explained the opportunity this new information presented, and suggested he move quickly to view the property before the bank put it on the market. The client made an offer, which the bank accepted after we’d negotiated it down to $2.1 million.

Thus the lesson of checking listings early and often. If I hadn’t stayed on top of that listing, I’d have never learned the property was in foreclosure—and I’m sure it would have sold immediately at the bank’s planned listing price of $2.2 million. Perseverance helped my client get the home of his dreams for a price much lower than what we had originally anticipated. Shortly after we had purchased the property, the other listing that was available also sold prior to the property being marketed on the MLS.

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