The Peninsula Hub

Burton Park Fun in the Sun Hometown Days

Nancy Wierenga — Sat, 19 May 2012 23:39:22 +0000

Enjoy some fun at Burton Park this weekend. Saturday evening with the band, “High ‘n’ Tight, while enjoying dinner from 5-9…

IMG_0197 I would love to try this sometime, only if I wouldn’t get sea-sick! LOL

IMG_0194 A back breaking experience. Oh, what it must be to be young….

IMG_0201 Music is always enjoyable for young and old a-like.

Burton Park Hometown Days

Nancy Wierenga — Sat, 19 May 2012 22:37:23 +0000

IMG_0200

Check out this video at Burton Park’s Hometown Days. Kids having fun bungie jumping. Today the bands were playing and I must say that ALL of them were great! Come back on Sunday for more entertainment and food.

Profits? It’s Not That Flippin’ Easy

Nancy Wierenga — Tue, 15 May 2012 16:12:36 +0000

It’s tough to resist the entertainment factor in those reality TV shows like “Flip That House.” But here’s a little secret you may not know: Not everything on TV is as it seems.

In fact, I would guess that based on my experience of watching people try and flip properties for profit, 90 percent who try it once never attempt it again.

I’m not saying it isn’t possible for this to be profitable, and I know people who do it full time and do make money at it. But the odds are highly against the average person succeeding. However, if all those reality TV shows have piqued your interest, here are a few items to consider if you want to attempt this strategy.

Buy Low, Sell High

First, you will have to buy a property at significantly below market value or sell it above market value to make money. If you buy it and sell it at the market, you will lose money due to commissions, time, and renovation costs. So your best bet is buying a property below market value. That’s not simply below what it sold for four years ago, it’s below what is the current market value after taking into account all the distressed property sales in the area. And if it’s a decent property, you’re probably going to be fighting many other individuals trying to buy the same house. And when lots of people are vying for one piece of real estate, the price gets bid up and you probably are going to pay market value.

Recouping Value

What about adding value with a renovation? While there is no question you can add value by renovating a property, you probably will not add more value than the cost of that value. (Check out the Hanley Wood estimator, especially “cost recouped” column.) You might put in a $20,000 kitchen that only adds $15,000 in value. More than likely you will go way over budget on the rehab and spend way more than the value you have.

Transaction Costs

You also have to keep in mind the 3-5 % transaction costs. You may think you will resell the property in three months, and you might. But what if it takes six months, or nine months. You will be making mortgage payments, property tax payments, insurance, some maintenance, HOA fees, and all other kinds of costs as you hope to get the property sold quickly. And they add up…

Fuzzy Math on This Flip

An individual I knew bought a property for $100,000 and sold it for $140,000, netting $40,000 in six months — so he told me. Then we talked about the costs involved. Purchase and finance costs, including $5,000 for rehab costs; $8,000 for holding costs; $6,000. He was up to $19,000 in costs before he even transferred title to the new owner. Sales costs added about $10,000 and he gave the buyer a $3,000 credit, too. That added another $13,000 in costs.

Here is the revised math on his flip: Sale price was $140,000, less total costs of $32,000 ($19,000 + $13,000), less his $100,000 purchase left him with $8,000 in profit for six months of work. So much for the $40,000 profit.

This result is more typical with profit-making real estate deals. Some people do score on short term, get-rich=quick attempts. Most of them are doing it full time and taking significant risks with their investing choices.

Luckily. the guys flipping properties on TV are making a living producing TV shows and getting paid by advertisers. That means their house flipping is more theater than business. There’s a much better chance they will make a living that way then trying to actually flip properties for a profit.

Information provided by Leonard Baron, MBA, CPA

Multiple Offers Make a Come Back!

Nancy Wierenga — Mon, 14 May 2012 17:33:58 +0000

In case you missed the news, markets are starting to pick up, which means more home buyers are likely to get off the sidelines. But, given the lack of good inventory in many real estate markets, there are more buyers than properties.

The result? Multiple offers are making a comeback.

The days of bidding wars, with several offers over the asking price, are probably gone in most markets. But buyers in certain markets are likely to see competing offers under the listing price. However, with that said, in the Mid-Peninsula area of the San Francisco Bay Area we are seeing many multiple offers and all are over asking. In Palo Alto, we had a home with 28 offers and another with 18. In San Carlos, another HOT spot we are seeing multiple offers all over asking and sold in a few days.

Here are three strategies for buyers to follow when the home they want has received other offers:

1. Don’t over-analyze the other offers or the listing agent

After multiple property viewings and interacting with the seller’s agent, by you at an open house, or your agent, the listing agent tells you there’s another offer on the property. Your reaction: “Really? Are you kidding me?”

Take the listing agent’s word for it, but only use that as one data point. Don’t spend too much energy trying to figure out what’s really going on with the other offers. If you love the property, keep moving forward, but at your own pace. Make the offer you’re comfortable with, and only when you’re comfortable making it. Don’t feel pressured to make an offer in order to compete, especially if you’re not ready to put in a bid.

2. Focus on your negotiations with the seller

Sometimes, the listing agent will say that the other offer is a better price, has a larger down payment or a quicker close. Who cares? The seller will still be looking at and working with your offer when considering their circumstances. For all you know, the other offer may be a horrible “low ball” offer or from a buyer who isn’t pre-approved for a loan or from an out-of-area agent who is unfamiliar with local customs and protocols. Or the buyer may have made the offer after only seeing the property once.

Even though there are other parties making offers, don’t get distracted by them. Stay focused on your own negotiations with the seller. Remember: You’re not negotiating with another buyer, and trying to do that will drive you nuts.

3. Present yourself and your offer in the best possible light

Most people make a decision about whom to sell their home to based not just on price but on the whole package. Who are the buyers and what is their level of interest in the home? What’s the price they’re offering? How many contingencies are they asking for and what are the timeframes of each? What is the down payment amount and length of escrow.

Consider writing a note of introduction to the seller with your offer or ask that your agent do so. Be sure to present a pre-approval letter with your offer too. This is a no-brainer in demonstrating to the seller that you’re a qualified buyer and you’ve taken the time to get approved for a mortgage. As an agent myself, I always include a separate sheet that highlights the important items in the contract in a nutshell as an over-view.

Finally, put your best foot forward with your earnest money deposit. While there are customary ways of approaching earnest money deposits in each real estate market, putting up only a few hundred or only a thousand dollars may give the seller the impression you’re not that serious. If you can put up the full 3 percent, do it. It shows you mean business. Don’t forget this money is refundable should something major come up, and your contingencies protect this deposit.

Ultimately, keep in mind that the sellers are probably embarking on a major life change. They may be selling due to a job transfer, new baby, or the need for more (or less) space. It’s a huge decision for them, and receiving an offer can be as exciting as it is nerve-wracking. So lead with your best offer and don’t wait for a counter because there might not be one. Be patient and understanding. See what happens. If you don’t get the property, learn from the experience and move on. Who knows? You may find something even better.

Proof that the Real Estate Market Is Coming Back

Nancy Wierenga — Wed, 09 May 2012 02:32:17 +0000

Hello everyone. I have had a lot of questions lately on our area in the Bay Area with our market. People are bidding well over asking. With a lot of buyers and very few houses or inventory, it has been a challenge these last couple months. I thought I would take some time to post this for you.

Last week, the National Association of Realtors (NAR) released their Pending Sales Report which showed that contracted sales were 12.8% higher than the same month last year and higher than any time since sales were impacted by the Homebuyers’ Credit back in April of 2010. The index stood at 101.4 which represents a level that is “historically healthy” (see methodology below).

Here is a graph showing pending sales over the last twelve months:

According to the National Association of Realtors:

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

What to Know About a Down Payment

Nancy Wierenga — Mon, 07 May 2012 16:32:46 +0000

My Mortgage Docs to be Reviewed by an Expert (Photo credit: Casey Serin)

When you buy real estate, it’s very exciting. First, you shop (till you drop) until you find your dream home (or maybe your dream home minus some bedrooms and closets). Then, you write possibly the biggest check of your life.

What is it? What happens to it?

It’s Not Actually a “Down Payment”

Because it’s the first money that a buyer puts “down” against the purchase, buyers often refer to it in slang as the “down payment.” That’s not technically correct, mostly because a purchase might involve more money down later. For example, you might buy a $400,000 house and hand over 5 percent of the purchase price (or $20,000), when you sign the contract, and then put another percent down at closing, so that your entire down payment is $40,000, in addition to the fact that you’re handing the seller a mortgage for the last 90 percent

How to Handle That “Earnest Money”

So technically, that check that goes with the contract is known in the trade as “earnest money” (because it’s used to prove that you’re very, very earnest about buying this property) or the “contract deposit.” You don’t, however, want to just hand it over. It should go into a special account, known as an escrow account, which is held by the escrow and title company in California.

Where Does the Money Go?

It varies by state. In California, all the other money in a real estate transaction, even the mortgage, goes through escrow, too (but that’s not the way it is in most states). More typical is that the earnest money stays in escrow until the deal closes — and you own the house or apartment.

If Something Goes Wrong, Do You Get Your Money Back?

Well, that depends on the terms of your contract. Your contract — which you should read carefully and have your agent explain — should outline in what scenarios your earnest money is forfeited, and in what scenarios you would get it back.

Typically, you might get it back if:

the seller changes his or her mind and decides not to sell
you have a contract with a financing contingency, and the bank denies you a mortgage loan
you have a contract with an inspection contingency, and the inspector finds something seriously wrong (like a terrible termite infestation) with the subject property
there is a fire in the property before you buy
you elect to cancel the contract rather than go through with the deal

The most typical reason not to get your money back:

you, as the buyer, change your mind and decide not to buy.

In other words, you can’t just cancel your contract on a whim. There are probably secondary provisions that keep you from “throwing” the deal — for example, if you have a financing contingency, then you wouldn’t have to go through with the purchase if the bank doesn’t give you a mortgage loan. But, there are probably contract provisions that state that you have to apply seriously and give the bank the income documentation and financial records that it asks for.

You have to be careful with an FHA loan and make sure you have a lender that is very familiar with the intracies of an FHA loan. One example cites a case where the buyer thought she was getting an FHA loan, and then found out that the FHA wouldn’t finance in the condo building where she was trying to buy. You might think that’s not her fault, but she still lost her deposit because she didn’t do enough research.

So, (I said this above but it bears repeating) read your contract. The huge amount of money you save may be your own.

3 Questions You Must Answer When Buying a Home

Nancy Wierenga — Sun, 06 May 2012 02:40:12 +0000

If you are thinking about purchasing a home right now, you are surely getting a lot of advice. And some of that advice is probably negative. Why buy now with prices still falling? Don’t you realize real estate is no longer a good investment? Don’t you know that people who bought six years ago lost their shirt? We understand the concern your friends and family have. However, let’s look at whether or not now is actually the perfect time to buy a home.

There are three questions you should ask before purchasing in today’s market:

1. What are the experts recommending?

In the last 120 days, many experts have said that buying now makes sense. This list includes: John Talbott, Christopher Thornberg and Warren Buffett.

2. When will I begin to see appreciation if I buy now?

This is a great question. Macro Markets, LLC is a company that studies housing prices. They started their Home Price Expectation Survey in 2010. They ask 100+ housing industry experts to project housing prices through 2016. The most current survey shows that the experts are predicting prices to remain relatively flat in 2012. The experts then project prices to rise reaching a cumulative appreciation of over 10% by 2016.

Purchasing a home today makes great sense from a financial standpoint. Think of the old axiom: you want to buy low and sell high. This decision should not only be a financial one however.

That leads us to our third and final question:

3. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances. The Fannie Mae National Housing Survey shows that the four major reasons people buy a home have nothing to do with money:

A good place to raise children and for them to get a good education
A place where you and your family feel safe
More space for you and your family
Control of the space

What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the reason you decide to purchase or not.

Bottom Line

Don’t allow money to get in the way of you making the right decision for you and your family. In the long run, the finances will work in your favor anyway.

Robert De Niro Sells Townhome

Nancy Wierenga — Thu, 03 May 2012 18:35:21 +0000

Even actors have to lower their prices on their homes and townhomes…

Born and raised in lower Manhattan, De Niro has owned the same townhouse in the coveted and historic West Village neighborhood for more than 30 years. However, the Academy Award winner appears eager to ramp up efforts to sell the 5-bedroom, 3.5- bathroom town home at 14 St. Luke Place, dropping the price from $14 million to its new list price of $11.995 million.

De Niro has also turned the listing over to his son, Raphael De Niro, a successful agent who runs a sales group out of Prudential Douglas Ellison group. The 5-story, 22-feet-wide building will take some elbow grease and cash to transform. According to the listing notes, the building is looking for not only an owner, but someone to transform this blank slate into a dream home fitting the high-end properties that surround it.

Robert de Niro (Photo credit: Siebbi)

Hot Harvest Nights in San Carlos

Nancy Wierenga — Thu, 03 May 2012 03:44:38 +0000

I am glad to say that we are at the time of year again when our “Hot Harvest Nights” starts.

Every Thursday night, May 3rd through September 13th, 4:00 p.m. – 8:00 p.m., Downtown San Carlos.

The market features 50 to 60 booths set up in the middle of the street which will be closed to trafficThis will be a chance to stroll, meet your friends and have a leisurely night enjoying the finest San Carlos has to offer. Shops and restaurants on Laurel Street will stay open late for this all-community activity. Don’t miss out!

I have enclosed some information that might be useful for you.

Hot Harvest Nights Web Site
List of Bands at 2012 Hot Harvest Nights (Acrobat PDF, 141 kb)
Merchant at the Market – Booth Application & Details (Acrobat PDF, 170 kb)

( Schedule of City Departments & Council Members – 2012 Hot Harvest Nights (Acrobat File, 71.5 kb) )

COSTCO DOING HOME LOANS

Nancy Wierenga — Tue, 01 May 2012 15:58:25 +0000

Visit msnbc.com for breaking news, world news, and news about the economy

One of the main differences with Costco is that they have several lenders that they work with, and they do not give out your information until you pick the lender. It will be interesting to see how this goes. So far, they have met with great response.

Smart move. Afterall, Costco has millions of folks visit their stores on a regular basis. Offering home loans makes sense.

This is also good news for the overall housing recovery!

What this move signifies is that one of the worlds largest retailers believes that the real estate crash must be over or they wouldn’t venture into selling loans. You can be assured that Costco did extensive research before they decided to get into the Mortgage Business.