Arbitration in San Carlos Purchase Contracts

As you near the end of our local PRDS Purchase Contract that is commonly used in San Carlos, you will stumble upon an elective clause dealing with binding arbitration.  If both the seller and buyer elect arbitration by initialing next to the clause, binding arbitration will be the sole legal avenue for the buyer and seller should they encounter a dispute which they cannot resolve themselves.

How Arbitration Works

Binding arbitration is an alternative dispute resolution to the normal lawsuit making its way through the California Superior Court system.  By selecting arbitration, the buyer and seller are essentially agreeing to forgo a trial by judge or jury and have their disputes forever settled by a third party arbitrator.  An arbitrator is usually a retired judge or an attorney with many years of experience and specific arbitration training.  The discovery rules for arbitration are usually more relaxed than the parties would encounter if their cases were heading through the court system.  The process itself is more informal as well. Arbitration was also born out of the idea of a more cost-effective alternative dispute resolution mechanism, but that is not necessarily the case anymore.  In fact, many arbitrations can be just as expensive as normal court cases.

Preference for Arbitration

In most purchases in San Carlos, buyers seem to prefer including the binding arbitration clause.  I tend to agree with the inclusion, with certain exceptions noted in the section below. Arbitration can be a very reasonable alternative to the normal trial action in the Superior Court system.  It tends to be less stressful and in some cases, more cost effective.

Reasons to Pass on Arbitration

There are a few very good reasons to pass on arbitration.

(1) If you have a seller who is moving out of the country, obtaining an order to show personal jurisdiction over that person through arbitration is going to be difficult and time consuming.  It would be far easier to institute an action against a seller who is then out of the country if you have all of the long-arm statutes available to plaintiffs involved in a non-arbitration matter in the court system.

(2) If you have (a) a seller who seems to be less than forthcoming on the disclosure documentation; or (b) a home that is naturally susceptible to possible disclosure issues that may have been missed….arbitration may not be the best course of action for you.  Why?  With an egregious or obvious error by the seller, it will be far most cost effective to go and get a summary judgment against the seller, than it would be to sit through an arbitration.

Keep This in Mind

Just because you and the seller do not include arbitration on the purchase contract does not mean that you will not end up there eventually, anyway.  Every judge in San Mateo County will first mandate that all parties try and work out their differences through a mediator.  If the mediation proves unsuccessful, most judges will encourage the services of arbitration.

* Disclaimer Sorry, but they make me insert this disclaimer whenever I am talking about legal options on the San Carlos Blog.  Nothing in this post should be considered legal advice or forming any type of attorney-client relationship.  While I still hold my license to practice law in California, this post and this site are about my services as a realtor, only. Any real estate decisions should only be made with the counsel of your own attorney and realtor. Thanks!

Heating Up

The San Carlos housing market is starting to heat up.  For those who have been in the market for the past few years, the coming months may be a bit of a new experience.  When listings are at a premium, buyers and their agents will need to have a polished strategy in place.  If you find yourself house hunting in San Carlos this year, here are a few thoughts that you may want to consider:

In Transition

The San Carlos market is very much in transition.  A historical perspective shows that while the majority of the last 60 years have been positive years for San Carlos real estate, for those periods of time when San Carlos had to work itself out of a recession, a transitional period takes place in the real estate market.  These transitional periods have one dominating force:  low inventory.  However, what makes this transitional period extraordinarily unique is that the transitional period has never been accompanied by mortgage interest rates around 4%.  Just how low is an interest rate of 4% historically?  It has never existed unless you were to take into account some of the government incentivized mortgage solutions coming out of the Great Depression.  I was recently talking with one longtime San Carlos realtor who told me that she remembered popping champagne when mortgage rates finally dropped below 15% in the early 1980s.  The point is that we are in uncharted territory when it comes to the size of the recession that appears behind us, coupled with historically low interest rates.

Some Buyers May Have Missed the Bottom

I wrote in a post earlier this week that realtors should stay away from predicting the economy and I will stand by that statement.  The only thing myself or any other realtor should be commenting on is past data points and what we are currently seeing in our market today.

I remember the exact day the San Carlos market suddenly stopped moving.  It was October 10, 2008.  The stock market had taken a tremendous hit and our market hit a wall almost instantly. An examination of all of the numbers over the last three and a half years reveals that the true bottom of the San Carlos market probably took place somewhere between eight to twelve months ago. There is no doubt that things have picked up over the last few months, which has led us into a market which will be very stingy with inventory.

Moving From a Buyer’s to a Seller’s Market

There is not a single San Carlos seller who is going to recapture their 2007 value on their home in 2012.  However, most will realize a noticeable difference from the four previous years both in terms of interest and value. As mentioned above, the first sign of a transitioning market is low inventory.  We are right in the middle of it right now and will likely be there for 2012.  Given the number of people trying to get into San Carlos right now, I believe you are going to see a logjam of buyers with the inventory that we do have and that can only increase value.

Serious Buyers Will Land Their New Home

While the inventory will be tight, and frustrating at times, buyers who have done their research, are working aggressively with a San Carlos agent and have their financing secured…..will find their home in 2012. Those who are taking more of a casual approach and are not ingrained in the market on a daily basis will still be looking for a home in 2013. 

What to Expect

Multiple offers will be back this spring.  We saw them on occasion in 2011.  They will be more prevalent in 2012.  The best thing you can do for a multiple offer situation is be prepared for it.  Recognize that for many price ranges and areas in San Carlos you will be a part of a multiple offer process.  There are many things you can do ahead of time to give yourself a better chance in these types of situations.  Have your agent give you some pointers on how to prepare for the process now. A big problem with multiple offer situations is that many of the offers that come in are from buyers who were unprepared for the situation…and the way the offers are written and presented highlight the unpreparedness.  If you are a buyer looking for your next home in San Carlos in 2012, do your homework now.  Get your financing in order. Work with a San Carlos agent and educate yourself on our market.

Inspections Are Important

San Carlos buyers would be wise to conduct their own inspections on a home before agreeing to remove their property inspection contingency. Most sellers will give the buyers a property and termite inspection as part of their disclosure package.  However, please remember that unless the buyer has paid a fee to those inspectors the reports will not bind the inspector and his reports to the buyer.  In other words, if the inspector missed a crucial item in the inspection the buyer will not have any recourse against the inspector because there is no privity of contract between the two parties.  If possible, the buyers should always obtain their own inspections.

What types of inspections should buyers get?

Inspections are expensive.  Understanding where and when to draw the line with inspections can be difficult.  I have always told my buyers to use their general property inspection as a primer to decide if other inspections are necessary. If you can find a great general property inspector, not only can they give you an accurate read on the home, but they can save you a lot of cash on other inspections which may not be necessary.

Start with the assumption that you need a general property inspection and a termite inspection. These are the two that are customary in San Carlos.  A good property inspector will alert you to the fact that, based on his findings, you may need to have a specialist come out and do a more thorough inspection on certain items.

The most popular secondary inspections in San Carlos

(1) Chimney Inspection.  Many San Carlos chimneys were cracked at the roof line during the 1989 earthquake. It is not uncommon to see this noted in a general property inspection.  The recommendation will be to have a specialist come out and give a cost to retrofit the chimney.  The cost for the retrofit is generally $2,000-$4,000.  Dean Designs in Redwood City is the best around at conducting the inspection and making the repairs.

(2) Roof Inspection.  Often times a general property inspector will note that a roof is nearing the end of its life expectancy and the roof either needs repairs or needs to be replaced.  Roofs are expensive.  The average roof replacement in San Carlos is around $17,000, so understanding exactly what you are up against is not a bad idea.  Companies that do roof repairs can also be difficult to find.  I have had good success with A & B Roofing in Redwood City.  A & B will also conduct the roof inspection for you.

(3) Drainage.  It’s a huge issue in San Carlos.  Our hills are filled with natural springs and the flats are filled with adobe clay that has never drained well.  When most of the houses in San Carlos were first built they were built with drainage systems that are now thought to be outdated or flat-out ineffective.  If the general property inspector notices standing water or evidence of standing water in the past, it may not be a bad idea to get a drainage expert out to survey the lot. I have had good success with Dobel Construction in San Carlos.

(4)  Pools.  If the home you are looking at has a pool, get a pool inspection.  While enjoyable, pools can quickly become expensive if there are cracks, drainage issues, loose tiles or heating issues.  Hill’s Pool Service in Burlingame is the go-to inspector for pools in San Carlos.

Questions on inspections or inspectors?

If you find yourself in need a recommendation on a general inspector or have the need for a specialist in a particular area, please don’t hesitate to contact me. I am happy to recommend those that have done truly outstanding work for myself and my clients in the past.

“It feels like we have been chasing a ghost.”

It certainly can feel like that.  The ever-elusive four bedroom home in the flats, updated and on a nice lot for 1.3M-1.7M….sounds easy enough, right?  Think again.  As mentioned in previous posts, there is nothing more difficult to purchase right now.  A while back I referred to this price range in the flats as the Bermuda Triangle of San Carlos real estate. Those searching for this property usually find themselves scratching their head in a state of confusion wondering when this elusive property may finally show itself.

Why is the four bedroom home in the flats so hard to find?

There are two primary reasons for the lack of inventory for this type of home in the 1.3M to 1.7M price range:

(1) Thank the Great Depression.  The smaller lot sizes, especially in White Oaks, cannot support larger homes without sacrificing most of the yard.  During the Great Depression, developers tried to give away lots in the failed White Oaks tract.  All the future owner had to do was agree to pay the property taxes.  If that wasn’t enough to make you sick, consider this:  Developers then cut many White Oak lots in half in order to make the property taxes more palpable for future owners….thus the reason for so many White Oaks lots falling under 5,000 square feet.

Helpful hint:  Keep in mind that the City of San Carlos will only allow you to build the first floor of your home on 40% of the lot size.  So if you have a 4,500 square foot lot and your home is 1,500 square feet plus a 300 square foot garage, you’ve reached capacity on your building ability for a single level home.  If you want to add any square footage, you will need to add a second story which is a more expensive proposition and more time consuming as well.  Many choose to move rather than go through a second floor addition.

(2) Those that have remodeled, have stayed put.  Remember that even twenty years ago San Carlos was nothing close to the town it is today. Before downtown was vibrant, before API scores and before the dot com boom, San Carlos was barely on the map from the perspective of others in the Bay Area. That all started to change in the late 1990s.  The first real recent surge in housing prices happened from 1998-2000 and then a second surge from 2003-2007.  Those two time periods also represent an era of the first modern remodels in San Carlos.

Why is this important?  The point is that many who remodeled in this time period have not been in their homes long enough to consider selling.  Many who have had the wonderful experience of living through a remodel will tell you (smiling) they are never moving again.  Additionally, those that remodeled during the second surge may not be able to stomach the loss they would take on their home since the market slowed in 2008.  Granted, we appear to be in a period of correcting some of those losses, but keep in mind that San Carlos homes that were priced at 1.5M in 2007, lost approximately 15% of their value.  Only in the last few months have we started to inch our way back up.

Is there any hope?

The good news is that all signs point to the first positive year in San Carlos real estate since 2007.  This will help loosen up some of these types of homes.  There are also many little things you can do to better your chances if you find yourself chasing this elusive property.  The little things by themselves may not seem like much, but together they are enough to make a difference:

(1)  Have a plan.  Wandering aimlessly and “waiting for something to come up” is a guaranteed way of not finding the elusive property. Understand that the amount of people looking for this exact home far outweighs the number of actual homes that will become available.  Know exactly what you are looking for an be ready to pull the trigger once you find it.

(2)  Glue yourself to the market and your agent.  Don’t let a day go by where you are not looking at the MLS.  Ask your agent to present you with any off-market opportunities as well.  If a property becomes available on Tuesday, don’t check your weekend calendar….check your Tuesday evening and Wednesday morning calendar.  If there is only one thing to take from this post about the elusive property, understand that if you do not act immediately in terms of investigating one of these types of properties as they become available, someone else will.

(3)  Have your financing ready to go.  Don’t wait until you find the perfect house to get you financing in order.  Often, lining up a valid pre-approval takes a few days.  Be sure that you have done this diligence ahead of time.

Be smart about your search and you will get your home.

If you suspect that you are searching for the elusive home, sit down and talk with your agent. If you can develop a smart and aggressive plan, attach yourself to the hip of the San Carlos market and have your financing ready to go, you will find the elusive home.

What Is A Relocation Sale?

Before getting into the nitty gritty of relocation, I want to mention that the following post is entirely my humble opinion.  It is based on being involved in numerous relocation sales and seeing the effects of the sale on both buyers and sellers. With so many companies starting to hire again, “relocation” is a topic that is entirely relevant for the San Carlos market.  If you are a buyer, you will run into a relocation listings in San Carlos.  If you are a seller being lured out of the area, you will most likely be presented with a relocation package.  Understanding how a relocation sale works and the pitfalls that exist around them for buyers and sellers will allow you to make informed choices.

A relocation sale takes place when the seller of a particular home decides to take a new job.  As part of the incentive for the seller to join his or her new company, the company promises the services of a relocation company which will act as a “concierge” through the process.  Unfortunately, the use of a relocation company for sellers and buyers is laden with pitfalls. Many do not realize these pitfalls until after it is too late.

How They Work

Most relocation sales work as follows:  The seller of a home is set up with a relocation company.  The relocation company screens and even recommends a listing agent.  Although, the sellers are free to choose the listing agent of their choice.  Once confirmed, the relocation company sets the listing in motion.  The listing agent will put the home on the market, but will agree NOT to list or mention that it is a relocation sale.  This small, but very important detail is reserved for the buyers only after they look at the disclosures. If the buyer wants to make an offer, the buyer and seller must verbally agree to all terms of the offer.  Sound odd?  It should.  Anyway, if the buyer and seller can agree to a price and terms a written offer is forwarded to the relocation company.  If it is an offer that the relocation company and the seller want to accept, the relocation company will sign the contract as the seller.  This is the key point for the buyer….and more on this point below. At this point the contract moves forward under the agreed upon terms.  Prior to the escrow closing, the relocation company will actually purchase the home from the sellers and then sell it to the buyers under the agreed upon terms of the contract.

The Key Pitfall For Buyers

The key pitfall for buyers centers around the fact that the seller of record is NOT the actual the owners of the property, rather it will be the relocation company.  Understand that there is no privity of contract between the buyer and owners.  This means the then current owners have no duty of disclosure to the buyers. If something is wrong with the property or if any other legal issue were to surface, the buyer’s sole recourse is most likely only against the seller of the property, which is the relocation company.  However, buyers would be wise to understand that since the relocation company is merely a middleman in the transaction and has never lived at the property, they are exempt from many of the statutory disclosure obligations and for all intensive purposes owe very little to the buyers in terms of disclosure.

The Pitfalls For Sellers

The pitfalls for sellers are numerous.  My experience has been that most sellers who have been through the process wish that they had simply conducted the sale outside of the relocation process.  Here are just a few reasons why:

(1)  Understand that the listing agent will be heavily “encouraged” to put the property on the market at a price that is very attractive for buyers.  Keep in mind that many relocation companies make a substantial amount of their money from the hefty referral fee that is charged to the listing agent.  Having the seller’s home sold quickly is in their best interest.

(2)  Many relocation companies are managing transactions in all 50 states and they expect a mostly uniform procedure to work for all states.  It doesn’t.  For example, in one recent relocation sale where I was the listing agent, the relocation company was in a state of panic when they discovered that I had ordered inspections on the property.  Of course, what they don’t know is that 90% of all homes in San Carlos have inspections completed prior to going to market.  Going to market without inspections is reckless and doing the sellers a complete disservice.  Without seller inspections, the seller is setting themselves up to have their contract price renegotiated after the buyer completes their own reports.

(3)  Sellers considering the relocation option should also understand that the relocation company will insist on the buyer signing all of their disclosures, in addition to the California mandated disclosures.  Often, the relocation company’s disclosures are irrelevant to our local market and end up only confusing potential buyers.

(4)  Many buyers will be utterly confused by the process and the disclosures.  Some will be so overwhelmed that they will not be able to react quickly enough, thus lowering a seller’s ability to attract interest from multiple parties, which is key in San Carlos.

(5) Many relocation companies will insist that the transaction is run through a particular title office.  This is problematic for a few reasons: (a) San Mateo County is a buyer-pay title and escrow county…so the seller should not be able to mandate the company; and (b) understand that the title and escrow company can make a big difference if the escrow is one that gets complicated. An agent’s pre-existing relationship with the office of choice can be the difference between a smooth transaction and one that goes sideways;  (c) sometimes the relocation company’s title office is not even in the same county.  Each county is different with regard to how their recordings work.  Taking the escrow out of the county is a risk that the buyer and seller should never be expected to take, yet relocation companies can insist on it.

(6) Many relocation companies are internally buried in red tape.  Many buyers expect answers to their offers and questions within 24 hours.  This can be a difficult timetable for many relocation companies to meet.  They will offer to “elevate” issues that you bring to their attention, which will lead to a different level of managers that will be unfamiliar with the case and the end result is delay after delay.  Many relocation companies are headquartered on the east coast and it can be impossible to track down anyone for answers after 2:00 pm Pacific Time.

Keep This In Mind

The sellers are not the direct client of the relocation company.  The relocation company’s client is the seller’s employer and insulating the liability of the employer is their main objective.  What appears to be secondary is making sure the seller gets the highest and best price for the home.  For instance, many larger employers that utilize relocation companies are constantly sued.  A house sale with little in the way of informative disclosures makes the employer a likely target because of its deep pockets.  Therefore, one of the primary, if not the primary goal of the relocation company is to protect the employer from being sued.  The result is a process that is ultimately set up so that the seller is simply unable to obtain the highest and best price for the home.

Consider This Option

If you are moving and are considering a relocation package which includes the use of a relocation company, try to instead to negotiate a direct cash payment instead of having the employer hire the relocation company on your behalf. Don’t be afraid to talk to other employees who have recently used the relocation company and have them relay their experience.

A Top 10 List For San Carlos Sellers In 2012

Yesterday, I posted the Top 10 List for Buyers in the 2012 San Carlos Real Estate Market.  Today, it’s the sellers’ turn.  Below is the Top 10 List which should help those thinking of selling their San Carlos home in 2012.

(1) Your Representation.  It all starts with your representation.  The agent and brokerage you choose in the sale of your home will be an extension of you.  My advice would be to choose an agent that is not only San Carlos based, but specializes in San Carlos.  Choosing a local agent will simply give you better odds at selling your home for a higher price and in a more efficient manner. San Carlos agents know other San Carlos agents and they often know what the clients of other San Carlos agents are looking for in a home.  They will simply have a better understanding of the market.

(2) It Takes a Team.  It’s more than just an agent. You need a full team.  The agent, stagers, designers, landscapers, contractors, cleaners and a host of others. It will help the efficiency of the process if your agent already has his or her team in place.

(3) Stage it. One point that I try to drive home to all of my sellers is that you only get one shot to impress buyers.  This means that every part of the house must show its best by the time the first buyer walks through the door.  Most buyers make up their mind in under 60 seconds.  Either the house resonates with them, or it does not. Some homes benefit from a full staging, while others look best with a redesign and some carefully chosen accessories.  Your agent can advise you on the best route for your home.

(4) Conduct Property Inspections Ahead of Time.  The title pretty much sums it up. First, always conduct a property inspection.  Some sellers do not do this in San Carlos and it can really leave them wishing they had.  It is best that any prospective buyer understands the issues ahead of presenting you with an offer.  If they agree to purchase the property, I can almost guarantee that it will be contingent on the buyer conducting and approving a property inspection.  There will be items that need correction in each San Carlos home.  At that time the buyer will come right back to you looking for credits.  Conducting a thorough property inspection ahead of time eliminates the re-negotiating.  Additionally, you should conduct your property inspection with enough time before the anticipated market debut date so that you can correct any minor issues that pop up in the report.

(5) Disclosures.  Do not take them lightly and insist that the buyer sign them ahead of presenting you with an offer.  There are a variety of legal pitfalls that you will avoid by handling it in this fashion.  If you have a tricky disclosure, run it by the broker of record for your agent or your attorney.  Seller initiated disclosures are a lightning rod for legal actions. Recognize that some buyer’s agents will try to get around having the disclosures signed ahead of time because of time constraints or laziness.  Don’t let it go.  Insist that they are signed.

(6) Open Houses Do Work.  I’ve read a variety of real estate articles and blogs which say that open houses do not work.  I can tell you with 100% certainty that they do work in San Carlos.  I think you will find that most people who recommend against open houses either do not have their license or have very little experience in selling homes.  I would estimate that at least 60% of the homes I have sold in San Carlos over the last few years matched its buyer at an open house.  This ties in to number (7), below.

(7) Realize That Many Buyers Are Touring Without An Agent.  Understand that the way buyers are previewing homes has changed.  Most buyers are not initially touring homes with their realtor.  The more common scenario is that the buyers end up touring homes on open house by themselves.  They either saw the home online or were instructed by their realtor to go see it. I would estimate that two out of every three buyers coming through open houses in San Carlos are doing so without their agent.  Recognize that you need to slightly adapt your strategy>>> With some buyers touring on their own, recognize that your marketing needs to change as well.  We have found that how you market online is critical.  For example, it is not enough to blanket sites with the listings, you need to take it a step further and provide all crucial information up front.  You also need to make it easy to show.  We have worked with a fantastic vendor which has given us the capability to not only to designate a site specific address such as www.123mainstreet.com, but those sites now allow the user to get unlimited access to features of the home with ability to connect with the listing agent immediately, either through phone, text, twitter, email or even Skype.  It’s a good way to make sure that you never lose a potential buyer whose agent is not acting quickly enough to show the property.

(8) Dealing With Neighbors.  It sounds terrible, but there is a saying in San Carlos that says most neighbors will never spend more time in your house than when it is for sale. We have all been there and experienced it. The sign goes up and the neighbors want to know what is happening.  Truthfully, I don’t blame them.  Their biggest asset is somewhat tied to what price you obtain for your home. Where it gets to be a problem is when they are consuming the listing agent’s time at an open house talking about everything but purchasing the house.  The listing agent’s time should be reserved for answering the questions of serious buyers.  There are a few ways to mitigate the impact with neighbors.  Your agent should be able to advise you accordingly.

(9) Time Of Year For Your Sale Is Important, But There Are Other Considerations.  Most people believe that spring time is the best time to sell your home.  I’ve always considered the best time to sell your home to be when demand is high and inventory is low. Granted, spring time does allow for yards to be in bloom and it does allow for a spring purchase and a summer move, but this is really a mid-west and east coast  proposition.  In fact, often times the worst weather for us in the springtime.  I believe it rained into June last year. Bottom line, for San Carlos the “spring is the best time to sell” saying, is not always true.

(10) Have Flexibility With Your Market Debut.  A common mistake for some San Carlos sellers centers on their market debut.  The worst thing you can do is pick a definitive date and go to market.  The better move is to pick a prospective date, wait and see what your competition is like, and then go to market.  For example, if you want to go to market on Friday, the 12^th, and on Thursday, the 11^th, two new properties come on the market that are similarly priced to yours, you may want to push your market debut off for a week. Your goal should be to grab all of the attention for that particular weekend.  Having some flexibility will serve your home well.

A New Type of Market For Many

As discussed over the previous month, the San Carlos housing market will start to steadily become more competitive over the next few months.  For many first time buyers, a competitive market will be something they have not experienced.  We have not had a competitive market in San Carlos since 2007.  In a competitive market, everything matters.  How you conduct your search, the information you obtain, your financing, your strategy and your representation…..they all matter and will ultimately play into the deal you strike on your new home.  The following is my list of tips for buyers specifically related to the San Carlos housing market:

1. Your Representation.  I started with this category because the realtor you choose to work with will have the strongest impact of all the factors mentioned above.  Realtors are not interchangeable.  There are significant differences between many of them.  Do your homework and interview any prospective agent. Most buyers rely on their agent heavily for advice, pricing and tenacity in a market that is going to be lean on inventory.  Your prospective agent should be a value-added proposition.  If this is not the case, it’s time to move on.  The last thing I would say about the representation that you choose, is that it should be local.  With the type of market we are expecting and with demand in certain price ranges, you will need every possible advantage.

2. Your Lender Matters.  In multiple offer situations everything in your offer will be put under a microscope.  If you are financed by The Bank of Little Rock, an internet based-bank or even a California (but non-local) mortgage broker or bank, expect that to count as a strike against you in a multiple offer situation. Conversely, if you are financed by a well-known local broker, expect that to be a point in your favor and possibly enough to push your offer over the top if all other terms are somewhat similar. Remember that above anything else in your offer, the financing is the only items that is truly left to a third party, which will make the seller nervous.

3. What You Can Afford.  The first thing I tell all of my buyers is that they need to understand that there is a difference between what you can be approved for and what you should actually be spending on a home.  Many buyers struggle with finding their comfort level as it relates to home pricing. It is never a bad idea to run a prospective house purchase by a financial advisor or even your accountant, at the very least.

4.  San Carlos’ Hot Sub Markets.  As mentioned in a previous post, buyers would do well to understand where they stand in relation to other buyers competing against them. The single most difficult home to come by in San Carlos will be a four bedroom home in Howard Park/Oak Park/White Oaks.  If you are in this buyer group, I cannot emphasize this enough:  unless money is no object, a strategic plan will need to be in place in order to be successful.  Under $725,000 on the west side and 3/2s between $800,000-$900,000 would be the other two groups.

5.  Expect An Early Spring Market.   The San Carlos spring market typically starts in March.  This year, I would expect it to start in February.  I say this based on listings our office has coming up and the overall feel of the market.

6.  Avoid Paralysis Through Analysis.  The internet has served real estate well.  However, at times there can be so much information thrown at prospective buyers that they lose sight of the bigger picture.  While you should certainly conduct your due diligence thoroughly before offering on any property, keep in mind that real estate has many variables for which there can be no assigned value:  views, flow of a house, neighboring homes and comfort, are all factors which cannot be reduced to a data point. At a certain point you have to trust your instincts.

7.  Don’t Lose Your Mind In A Multiple Offer Situation.  It happens more often than you may think.  I have had some of the calmest, most reasonable buyers temporarily lose touch with reality during the process.  It is a difficult situation for most agents as well.  Of course, I want to see my clients get the property….but, I also do not want them to wake up and regret the price the next day. Buyers tend to lose focus for a few reasons.  The most common are:  (1) it’s a dream home for the buyer and they have already taken the mental step of believing that it is for them and their family; and (2) some are simply extremely competitive. For me, having to reel a few buyers back in during this process has been the single most difficult thing I have had to do as an agent.  That being said, most realize the error a day or two later and are thankful for the guidance.  I’ve seen other agents do this as well in San Carlos.  The good ones get it.

Here’s how to avoid this problem>>> I have found this to be a reasonable solution:  Operate on the assumption that a multiple offer situation is the signal to the rest of the market that the property is most likely underpriced.  With this in mind, the buyer and the agent should undertake a thorough analysis of the property before the day of the offer and independently come up with the value.  Typically, this is a small range.  Then strategically apply that range to the offer process.  If a counter offer or multiple counter offer comes into play, you already have your unbiased guideline in front of you and one that has less emotion attached to it.

8. Don’t Assume That The MLS Represents All Available Inventory.  If you read this blog often enough you will know that there are a handful of homes transferring ownership off the MLS in San Carlos.

9. Tour Homes Before They Go To Market.  Now, this isn’t always possible.  However, if you and your agent are aware of a property coming onto the market, it never hurts to call the listing agent and ask for permission to see it ahead of the market debut.  In the event that the property is one that you are interested in pursuing, you just gave yourself a leg up on the competition.

10. Think Outside The Box.  Our local form real estate contract is somewhat limiting in areas. Just because a check box does not exist for an option that you believe would help your cause, don’t assume that you cannot offer that option to the seller.  Well drafted addendums and clauses should always be seen as ways to give you an edge.  Work with your agent on some of these possibilities.  Usually, these clauses and addendums are tailored to the circumstances of the seller….so knowing the details of the seller’s situation is a must.

* Tomorrow’s post will highlight the Top 10 List for sellers in the 2012 San Carlos Market.

Moving Forward…..Finally.

The San Carlos real estate market was knocked to its knees in 2008 and 2009. It stood on one leg in 2010 and two in 2011.  2012 will see it take its first step forward.

All of the building blocks for a solid foundation are in place: high demand, an improving economy, solid local employment and cheap money. The sentiment among San Carlos buyers and sellers is refreshingly different. The market is not going to go crazy, but it will be in the black.  Multiple offers will be more common and the competition will increase.  If you plan to be involved in the market on one side or the other…or both, keep the following in mind:

(1) Have An Aggressive Plan.  The wait and see attitude of recent years will not work in 2012.  You and your agent will need to be aggressive in all facets of your home search. Do your homework ahead of time and have a strategy.

(2) Understand The Hot Sub-Markets.  Looking for that move-up home with four bedrooms in White Oaks and Howard Park?  So is everyone else.  It will be the single most difficult home to come by this year.  There are strategies that you and your agent can use to catapult yourself ahead of some of the competition.  Other hot sub-markets are 3/2s from $800,000-$900,000 and any home sub-$725,000 on the west side.

(3) Your Financing.  You have to operate on the assumption that you may face competition for your prospective home in 2012.  With this in mind, there are two things that will do you more harm than good with regard to your financing.  First, make sure your mortgage broker is local.  Few things make listing agents as nervous as an out of area mortgage broker, for all of the obvious reasons.  Second, there is currently one major bank (that shall go unnamed) that is having a terrible time finalizing home loans.  After my last experience with them I swore I would never take an offer where they were the financing bank again (at least until they get their act together).  Your agent will more than likely know the bank I am speaking of…..many others doing business on a regular basis in San Carlos are aware of the issue as well.

Don’ Forget!

San Carlos Educational Foundation Package.  As I wrote about a few weeks ago, I am pleased to announce my partnership with SCEF with regard to buying and selling real estate.  To learn how you can complete your real estate transactions and benefit our schools at the same time, please click here.

The 2011 Complete Year-End Real Estate Report.  This completely unique and informative report gives you the details on every home sold in San Carlos in 2011.  The report also breaks down the data between the six Areas of San Carlos.  Click here for the report.

2011 Year-End Complete San Carlos Real Estate Report

The 2011 Year-End Complete San Carlos Real Estate Report is your source for anything and everything that happened in the San Carlos Housing Market in 2011.  For those of you who cannot get enough data points, this report will give you plenty to work with.  You can download this entire report to your computer as a PDF.

What Does the Report Contain?

The report contains the following:

* Every Single Family Residence (SFR) to close in San Carlos in 2011.  Included is the Original List Price, Days on Market (DOM) and Final Sales Price.

* The six different areas of San Carlos:  Howard Park, El Sereno (White Oaks and Oak Park), Cordes, Beverly Terrace, Clearfield Park and Alder Manor.  All are broken down to show you the average price, median price, average price per square foot, DOM and more, for each Area.  A color coded map is included in the report to help you identify the six different Areas of San Carlos.

* The six different Areas of San Carlos are highlighted with what buyers find attractive.

Please click here to download a copy of the full report.