I remember meeting with a seller who’s listing with another agent had expired. I asked the seller how the traffic had been. “Great!” the seller exclaimed. “We have had an open house every weekend, and we are getting tons of traffic!”. “How about showings by Realtors?” I asked. The seller looked puzzled. “Well… er… not too many” was the reply. “Okay, so what has the feedback been from the open house traffic?” I inquired. Here comes the puzzled look again. “Well, er, I’m not really sure. I think they all liked it”. “Then why no offers?” I asked. The seller had no answer.

In real estate, not all traffic is equal. Showings from brokers is the best traffic you can get. And Open Houses can be fools gold. They often trick a seller into thinking they are in the game, when in reality they may have no chance of selling. In fact, if you want to get a real read on where your house is in the marketplace, stop doing open houses.

The difference is this. In order to see a home that is for sale but not open on weekends, the potential buyer has to take some action. They have to contact the listing agent, or contact their own agent, or send an email, or take another step to arrange a viewing. And each step is a litmus test for the buyer’s motivation level. So as a seller, when you get a showing from an agent, at least you know there was some effort involved in the decision to see your home.

On the flip side, you don’t need to take any action to see an open house. You don’t even have to be in the market to buy, and many visitors are in fact not buyers. You don’t have to be qualified, have a down payment, or a credit check. Open house visitors can come in, wander around aimlessly looking at pictures, gathering decorating ideas, and just plain kill time. I am convinced that many people who come through open houses are just plain bored, and looking for an excuse to get out of the house. Not the type of viewings that are going to result in an offer any time soon.

The other compelling reason not to do open houses, but rather aggressively seek showings from agents, is that you get far better information and feedback from the agent showing. The listing agent has the opportunity to interact with the showing agent to find out what the buyer thought, what they liked, any concerns or negatives, and in general how your home ranks in the mind of the buyers. This is very valuable information. At open houses, even if you make a determined effort to solicit feedback from visitors as they leave, you are often greeted by blank stares or shrugs, or puzzled looks that seem to ask “why in the world would you care what I think about this house… I have no intention of actually buying this or any other house”. Not the type of market information that has any value. And asking an open house visitor to sign a guest register seems to be like asking them to fill out an IRS form. They scribble down illegible names and fake email addresses. In fact, just last month I discovered to my amazement that “Elvis Presley” and “Jimmy Carter” had recently visited my open house. Funny, I think I would have remembered them.

Okay. By now many of you are saying “yeah, but there are buyers who come through as well”. And you would be correct. However, if they really are buyers, and they have some level of interest in the house, and it is not being held open, they will take another action to set up an appointment to view the house. So they will see the house, and the sellers agent will actually have a chance to extract information and point out the benefits of the house to the potential buyer, either directly or via their agent.

So back to my premise. The seller is probably thinking if you stop doing open houses, you might not have any showings at all. My point exactly. If you are not getting showings from agents, then that is telling you something… namely, buyers are not interested enough in your home to take the minimal steps involved in setting up an appointment to see the home. You probably need to change something… price, condition, staging, etc. You are not getting dozens of visitors, but you are getting a real indication of how your home stacks up in the market. For example, I have a listing that has received 4 offers in the last 2 weeks, and we have not had one open house. I did receive a number of calls from people asking if it was going to be open. And I was able to set up appointments for a private showing with the serious parties, where I had an opportunity to actually show them the house and explain the many features and benefits without being interrupted by some random visitor saying “excuse me, do you know where they got this painting? I LOVE it!”

So if you want to get serious about selling your house, stop doing open houses. Unless of course you want to brag to your neighbors that “Robert Redford” came through.

Popularity: 14% [?]

The real estate market in Pleasanton CA in July looked a lot like the market in June. The activity level is remarkably steady, though not brisk. Inventory is up slightly, especially in the under $1 million price bracket. But for now the market seems to have settled into a slow but steady pattern. The good news is that there are sales occurring… 45 pending sales in July to be exact, down slightly from 49 pending sales in June. The bad news is that there are now 269 houses on the market, which is up from 243 houses available at the end of June.

For sellers this means you will have to be competitive with other homes on the market. You need to be one of the best values in your price range to attract the attention of buyers, which is no easy task. In fact, buyers today have an attention span seemingly measured in hours or even minutes. “Yes, I kind of like that house” in the morning turns into “It’s okay, but let’s see what else is out there” by mid-day, and by evening they have completely moved on. For buyers, this is a prime opportunity to get a great house in a prime neighborhood for prices well below the peak of 2005. So here is what the market looks like at the end of July (click on graph to enlarge)

In the under $1 million bracket, inventory increased to 146 homes for sale at the end of July, up from 120 at the end of June. There were 33 pending sales in July, which has remained fairly steady (30 in May, 32 in June). There is a 4.4 month supply of homes on the market now at the July sales rate (click on graph to enlarge)

In the $1 million to $2 million bracket, inventory has crept up slightly, with 33 homes on the market at the end of July, up from 32 at the end of June, and 30 at the end of May. However, sales have declined, with 9 pending sales in July, down from 14 in June and 20 in May. (Click on graph to enlarge)

In the luxury home bracket over $2 million, there were 36 homes on the market at the end of July, down from 42 at the end of June. Some of these were the result of price reductions, and some sellers simply decided they no longer wanted to play in this market. There were 3 pending sales in July, which is the same level as May and June. Overall, conditions in this price bracket remain sluggish, and there is currently a 12 month supply of homes at the current level of inventory and sales. (Click on graph to enlarge)

I expect inventory to edge up slightly as we get towards the end of Summer, and sales to remain fairly stable at current levels. Still a great time to buy. And if you are going to sell, you had best price your home to reflect the current market, or be very, very, very, very patient.

Popularity: 100% [?]

I love this sign, courtesy of the Knoxville News Blog. With so many “bottom feeders” out there posing as buyers, it is refreshing to see someone tell it like it is. I know everyone wants a deal, and I am generally good with that. But it gets annoying getting calls from people asking if the sellers on your home that is listed (correctly, by the way) at $899,000 will take $650,000. Sure, as soon as John Lennon plays his next live tour (Click on image to enlarge)

Popularity: 99% [?]

So now that everyone has spent the last decade in a frenzy to put in granite counter tops, the New York Times is reporting that there is apparently an elevated risk of radon contamination from some of the granite being used in homes. Great. So my half dozen trips to the granite dealer to pick out the “perfect” slab, the endless discussions about which bull nose edge to use, and the decisions about where to put the seams and whether to do an over-mount or under-mount sink have potentially added to my long (and growing) list of threats to my health?

Somehow, this takes all the joy out of it. For one thing, I think it would be awkward at Thanksgiving trying to carve the Turkey in one of those Haz-Mat suits with the oxygen tanks, and screaming at the top of your lungs “Aunt Phyllis, do you like dark meat or light?”. Or having friends over for a wine and cheese party in your new kitchen, and then promptly treating your departing guests to a Karen Silkwood shower in the foyer before they leave, complete with flashing red lights and sirens. It seems like a lot of work. Maybe I should have just put in tile after all.

Now before you go out and rip out all of your granite, it looks like the risk is relatively low in most cases:

Allegations that granite counter tops may emit dangerous levels of radon and radiation have been raised periodically over the past decade, mostly by makers and distributors of competing counter top materials. The Marble Institute of America has said such claims are “ludicrous” because although granite is known to contain uranium and other radioactive materials like thorium and potassium, the amounts in counter tops are not enough to pose a health threat.

Indeed, health physicists and radiation experts agree that most granite counter tops emit radiation and radon at extremely low levels. They say these emissions are insignificant compared with so-called background radiation that is constantly raining down from outer space or seeping up from the earth’s crust, not to mention emanating from manmade sources like X-rays, luminous watches and smoke detectors.

Still, if you are unsure, it might be smart to get a radon test if it will help you sleep better. Or line your kitchen walls in lead. But one thing is for sure… granite counters still look the best!

Popularity: 92% [?]

The big news this week has been the announcement the the Federal government will stand behind Fannie Mae and Freddie Mac, and essentially step in to bail them out if necessary. This is good news for the jittery housing market and certainly the battered mortgage industry. But coming after the Fed-brokered sale (don’t call it a bail out!) of Bear Stearns, it occurred to me that I am starting to get this capitalism thing. It seems now that capitalism can be boiled down to one simple thought… take risk, and make great money when you succeed, and when you fail, the government bails you out.

I want to be the first to go on record as saying we need a federal Realtor bail out plan. Oh sure, you laugh at first, but Realtors do so much more than sell houses. And with all the trouble in the housing market, Realtors are getting out of the business in record numbers, which is having a huge impact on both our economy and our society. Think of all of the things Realtors contribute:

* We send you all kinds of neat recipes in the mail. Who hasn’t been frantically searching for a desert recipe for a party, when suddenly a card arrives in the mail from a Realtor with recipes like “Peggy’s Apple Pie” or “My Favorite Mint Chip Brownies”.

* We drop off pumpkins at Halloween. Talk about a service to society. Nothing says inadequate parenting like failing to buy pumpkins at Halloween. And with gas at $5 per gallon, it seems silly to waste all that gas with a trip to the store. Problem solved, thanks to us Realtors.

* We put flags out for you on 4th of July. Thanks to us, you don’t have to hassle with putting up a flag. We put thousands of them up for you, and every house in the neighborhood gets a cool mini flag in the front yard.

* We purchase ads on those stupid little dividers at the supermarket check out line. Who else is going to do it? I doubt I’ll see a Bear Stearns ad on one anytime soon.

* We keep you in shape. Sure, you could go for a nice relaxing stroll on a Sunday afternoon, but it is far better for your agility and flexibility to have to dodge open house signs on the sidewalk. And since they are about the right size, you might even consider doing some hurdles while you are at it. It seems annoying now, but you will thank us later. Trust me.

* We keep newspapers in business. If it weren’t for real estate advertising, newspapers would be out of business. Who doesn’t appreciate that cute little ad with the overpriced house, the picture of the Realtor with their dog, and that catchy call to action “This One Won’t Last!” (of course it’s been on the market for 7 months) costs an arm and a leg. Sure, I know the public does not look for homes in the newspaper, but we are team players. 40% of a real estate company’s revenue is a small price to pay to keep these papers alive for the greater good of all.

* We provide free education about real estate to the public. How many times have you been treated to an obnoxious, in-depth conversation about real estate by some Realtor in line at Starbucks or the grocery store. At first you think they are talking to you, but then you see that earpiece with the blue light on it, and you realize they are talking on their cell phone. “Yes, I think house prices are going up. Look at the house on Maple Street. It sold in like 4 months!” or “let’s talk about how we can make this deal for you”. The public would have to pay top dollar for this kind of inside information.

* We fund a large portion of the revenue from traffic tickets. Driving while reading MLS printouts, parking on the wrong side of the street, rolling through stop signs because we are late for our open house… the list goes on. Simply put, without Realtors, your taxes would be higher.

* We give you access to your neighbor’s houses. Be honest here, how many times have you gone to an open house in your neighborhood just out of curiosity? How else are you going to snoop around your neighbor’s home without feeling like a voyeur? We provide you with the perfect excuse to be nosy… almost like a Desperate Housewives home tour service.

* We single handedly keep the Success and Coaching industries in business. I get probably 147 invitations to free seminars each week. Without Realtors, these people would starve, causing a massive ripple effect economically, and more importantly to the nations psyche since lately the only positive news is coming from gurus like Tony Robbins, the guy with the big teeth.

These are just a few of the many benefits that Realtors provide to society, and I for one think the Federal Government should immediately implement a program to prop up the Real estate brokerage industry. Since they like acronyms, we could call it the RAP, or Realtor Assistance Program. As a side benefit, I could finally tell my teenage daughter how much I love RAP.

Popularity: 83% [?]

Let’s see. I am beginning to feel like Bill Murray in the movie “Groundhog Day”. Alarm goes off, I get out of bed, and the everything looks eerily similar. For the Pleasanton CA real estate market, the month of June looked a lot like the month of May. Sales were steady but not spectacular, the economic and national real estate news was troubling, and an air of uncertainty hung over the real estate market like…. well like smoke from dozens of wild fires. Wait, that was smoke from dozens of wild fires.

It’s not that all of the news is bad. There are some mixed signals in the market, or at least the real estate market. As long as you don’t have your life savings invested in GM stock, things are doing pretty well, all things considered. We continue to see signs that some of the depressed markets in outlying areas are turning the corner, with sales activity up substantially in the previously decimated markets of Brentwood, Tracy, Antioch, and Stockton for example. And the continued sluggish market is creating some excellent deals on homes that would have had multiple offers back when Howie Mandell actually had hair.

For all of Pleasanton in June, the inventory of available single family homes ended the month at 243, which is actually down slightly from 245 at the end of May. Pending sales for the month of June were 49, down slightly from 53 pending sales in May. Basically a 5 month supply of homes on the market given the sales rate in June, which is not great, but not bad. (click on graph to enlarge).

For the under $1 million price range in Pleasanton, inventory was down from May, with 120 available single family homes at the end of June (as compared with 132 at the end of May). Pending sales were up, with 32 sales in the month of June as compared with 30 in May. Some neighborhoods are moving more than others, and there is still an emphasis on value in the market, but if priced right, you can still sell your home quickly in this price range. (Click on graph to enlarge).

For the $1 million to $2 million market, inventory was up slightly, with 81 available homes at the end of June, compared with 71 at the end of May. Pending sales were down some in this bracket, with 14 sales in June as opposed to 20 in April and May. Financing has remained problematic in this price bracket, with delays and hyper-stringent underwriting making transactions difficult and fraying the nerves of all parties to the transaction. (Click on graph to enlarge).

In the luxury home segment over $2 million, things remained unchanged in June. There were 42 available homes on the market at the end of both May and June, and 3 pending sales in both months. Activity in this price segment remains sluggish, and there continues to be downward pressure on prices here. (Click on graph to enlarge)

As we enter the prime summer months, all eyes remain on the Fed, who is walking the tight rope between lowering rates and increasing liquidity to shore up the battered banking system on the one hand, and taking steps to shore up the dollar to fight runaway oil prices and inflation on the other hand. How this battle takes shape in the coming months will go a long way in determining the state of the real estate market towards year end. And just to further confuse the waters, it is an election year, so anything goes. One thing is for sure… we live in interesting times.

Popularity: 89% [?]

There has been tremendous fallout from the sub prime & mortgage market meltdown. Lenders have tightened up underwriting criteria, and are demanding higher credit scores. Downpayment requirements have increased, and most of the high risk “stated income” loans have gone by the wayside. There is, however, no truth to the rumor that the major lenders now demand your first born child as collateral as well. Needless to say, the stricter lending environment has had a direct impact on the local real estate market. And once a buyer and a seller agree on price and enter into a contract, the challenges are not over.

Appraisals have become an issue for many transactions now as well. Lenders have been stung by overly optimistic appraisals, and even out right appraisal fraud. During the wild and frenzied market of the early 2000’s, when money was cheap and plentiful, appraisals struggled to keep up with the surging prices. Appraisers have to use data on closed sales, which means in a rapidly increasing market, by the time the comparable sales close escrow and become viable for an appraiser, often they were behind the market. Appraisers were forced to compensate for the rapid price moves by using adjustments for market conditions. They were forced to use adjustments to compensate for differences between the subject property and the comparable sales, and many times these adjustments added 10% or more to the property value in order to bring the appraisal in at the sales price, which was often bid up over asking price. And in cases where there was outright loan fraud on the part of the borrower, the appraisal had to be inflated well above market value (again using shaky comparable sales and excessive adjustments) in order to give the fraudulent buyer money back at the close of escrow. While it certainly was not always the case, many times lenders on non-performing loans or loans in default found that the appraisals contained excessive adjustments and inaccurate data.

As is often the case, the pendulum has now swung back the other way. Lenders are very diligent in analyzing appraisals, and now have tightened up the requirements for appraisals to be valid. They are requiring that the appraisals have comparable sales within the last 90 days that are within the immediate neighborhood of the subject property. And in cases where the appraiser is using excessive adjustments to the subject property because of poor comparable sales, the lender is often adjusting the appraised value downward during the review and underwriting process. This is causing some deals to fall apart during escrow, or forcing sellers to renegotiate the price to reflect the lower appraisal. Most troubling is that the appraisal review process can often occur at the 11th hour, catching both the buyer and seller by surprise.

So how do you protect yourself? As a seller, it is imperative that your agent inquire with the lender about the status of the appraisal, and whether there is an appraisal review that is part of the underwriting. On all loans appraisal reviews are commonplace, and sometimes lenders even require two separate appraisals on large loan amounts. Until the loan has made it through the lenders underwriting and appraisal review process you might not have an escrow that will close.

As a buyer, your agent needs to be extra diligent in how and when they remove the appraisal and loan contingency. You might get a loan approval from the lender, but again you need to make sure that it is not subject to an appraisal review. You should not remove the loan and/or appraisal contingency until you know that the appraised value is approved by the lender. Otherwise, you might find yourself in the position of removing your loan and appraisal contingency, and then finding out that the appraised value has been reduced by the lender.

The properties that have the most difficulty are homes that sell above recent sales in a neighborhood. Homes that are larger, or more upgraded, or have spectacular views and amenities should be expected to sell for more than other homes in the same neighborhood. But when it comes time to have the lender approve the appraisal you might have issues, since the appraiser will have to use large adjustments in the value to justify the higher sales price. And the lender very well may knock down the appraised value of the home during the review process, even though the home is clearly worth more in the “real world”. As a rule, you should have your home “bracketed”… in other words, there should be some homes in the immediate neighborhood that have sold for more than your home, and other similar sales of homes at the same price or less so that the lender has a good range of value behind the appraisal.

So if you have an over-improved home, or a home that was added on to that is now larger than the other homes in the neighborhood, you might have some problems with the appraisal when it comes time to sell, since it will be difficult to find comparable sales in the immediate neighborhood. So you might want to think twice before you put in that Resort sized pool with a water slide and swim up bar, or that $60,000 outdoor kitchen, or the tennis court, etc. While it is always cool to own the nicest home in the neighborhood, you might not be smiling when it comes time to sell, and you have to justify the appraised value to the lender.

Popularity: 96% [?]

The Pleasanton CA real estate market remained steady in May, with activity down slightly from the banner month of April, and inventory climbing slightly. Of course, with the Memorial Day holiday, many people were no doubt exhausted from spending hours trying to find gasoline for under $5 per gallon for their 3 day weekend, so I’m sure that few had the time or energy to look for homes. That being said, the market activity seems to be decent, although there is still downward pressure in most price categories and neighborhoods.

For the month, we had 53 pending single family homes, which is down slightly from the 67 we had in April, but still respectable. Inventory is up some, which is normal from a seasonal standpoint. We ended the month of May with 245 single family homes on the market, as compared with 221 at the end of April. For the market overall, we currently have a 4.6 month supply of homes. Or put another way, if no new homes come on the market, at the current sales rate, it would take 4.6 months for all the current listings to sell. (click on graph to enlarge)

In the under $1 million segment, pending sales were down for May, with 30 pending sales for the month, as compared to 42 in April. Inventory at the end of May was 132, up from 118 at the end of April. (click on graph to enlarge)

In the $1 million to $2 million bracket, the market was stable. Pending sales were 20 for the month of May, which is the same as April. Inventory rose slightly at the end of May, with 71 homes on the market, as compared to 70 at the end of April. This is arguably the strongest market segment right now, with a 3.5 month supply of homes. (click on graph to enlarge)

In the luxury home segment over $2 million, sales were down slightly, with 3 pending sales for the month, as compared to 5 for the month of May. Inventory jumped from 33 available homes at the end of April, to 42 homes at the end of May. Overall in this price segment, it is still sluggish, with a 14 month supply of listings. (click on graph to enlarge)

At the end of the day, it is still a value market. Homes that are priced well and in pristine condition will continue to attract a lot of interest from buyers (even multiple offers on occasion). Other homes that have unrealistic prices or major flaws in condition or location will continue to struggle. There continues to be positive signs from the weak secondary markets like Stocton, Tracy, Antioch, etc. We are seeing much stronger activity in these markets, which might be an indication that these markets are starting to stabilize, which is good news. Is the bottom of the market closer than we think? Stay tuned…

Popularity: 90% [?]

There is a silver lining to the slumping real estate market after all. If you purchased your home in the last 3 years or so, it is likely that your home has probably decreased in value. While that is certainly not welcome news, there is a small benefit. You are allowed by law to request a reassessment of your current assessed property value, thereby potentially lowering your property taxes temporarily.

The assessed value can be found in two ways. First of all, the county tax assessor (they are so nice to do this) send you out a NOTICE OF ASSESSED VALUE for the coming property tax year. Remember, the property tax year runs July 1st through June 30th. In the NOTICE OF ASSESSED VALUE, the assessor indicates the new assessed value of your property for the next tax year based on the property value as of January 1st.

If you have not saved this notice, you can also refer to the actual property tax bill when you receive it. Both documents will indicated your assessed value. You can also contact the county assessor’s office and get the information that way.

If you feel the market value of your home is less than the assessed value as of January 1st, then you have the right under proposition 8 to file a Decline in Value Reassessment Application. You can obtain the form from the county assessors office, or by using the link below.

On the claim form, you must provide the Assessor with any information that supports your opinion of the market value. The best information, of course, would be sales comparables. You should provide two comparable closed sales that sold as close to January 1st as possible, but no later than March 31st. Remember, the assessed value of your property is based on it’s value on January 1st of that year. Of course, the assessor is free to consider other sales information at their disposal to arrive at a decision, so it is not an automatic approval. This form should be submitted to the Assessors office before June 2nd.

If the assessor does not agree to your value, you do have the right to appeal the decision. If you decide to appeal the assessed value, you must do so between July 1st and September 15th. The appeal forms can be obtained by contacting the assessor’s office.

Once the assessor agrees to a temporary reduction of assessed value under Proposition 8, the assessors office automatically review the subsequent years assessed value. Again, if you do not agree, you can file another appeal in that tax year. If the property appreciates, the assessed value can never increase above the Prop 13 baseline assessed value (your annual assessed value based on your original market value or purchase price, plus increases). So you will never be worse off for filing an appeal. It is a temporary reduction in assessed value.

Here are links to information and the Decline in Assessed value forms:

Alameda County:

Reassessment Information (PDF)
Decline In Assessed Value Claim Form (PDF)

Contra Costa County:

Reassessment Information
Decline In Assessed Value Claim Form (PDF)

Popularity: 97% [?]

The Pleasanton CA real estate market saw a spike in activity in April, as pending sales for the month rose to their highest level since June 2007. Despite continuing dismal news on the national and regional real estate markets, and shaky economic indicators, many buyers in Pleasanton are deciding that values have reached a point where they are very attractive, and are deciding to act. This is yet another example of why there is no “real estate market”, but rather a series of micro markets that vary in terms of activity, outlook, and strength. Even within the city of Pleasanton there are neighborhoods and areas that are fairing much better than others. But as a whole, Pleasanton saw a strong month of activity in April. There were 67 pending sales for detached homes in April, up from 35 in March, and 43 in February. Inventory rose to 221 homes on the market at the end of April, up from 206 in March. This is perhaps a sign that this summer could see strong activity, certainly welcome news (click on graph to enlarge).

In the under $1 million price range, there were 42 pending sales in April, up significantly from 26 in March and 30 in February. Overall, 2/3 of the sales were in the under $1 million price range. Inventory rose to 118 available single family homes at the end of April, up from 106 at the end of March (click on graph to enlarge).

In the $1 million to $2 million price segment, activity was up significantly. There were 20 pending sales in April, making it the most active month in this price segment since May of 2006. March saw 8 pending sales in this price segment, so it was certainly a good month. Inventory rose slightly, with 70 homes on the market at the end of April as compared to 67 at the end of March (click on graph to enlarge).

In the over $2 million price range, activity was up as well with 5 pending sales in April as compared with 1 in March and 3 in February. Inventory remained unchanged, with 33 homes on the market at the end of April (click on graph to enlarge).

Overall, the spike of activity is certainly welcome news. With many sellers getting more aggressive on pricing, many buyers are getting off the fence and taking advantage of the values available in the marketplace. With interest rates remaining low for the foreseeable future, there is hope that this will be an active summer for the Pleasanton housing market. Only time will tell….

Popularity: 93% [?]