A new home owner called Len Tillem on his Radio talk show today. He bought a house close to San Thomas Expressway for about $800k. The seller wrote in his disclosure that there was no traffic noise so he assumed that it was quiet. He claimed that he only saw the place during the weekend and it was quiet. Now that he moved in he hears the traffic all the time and he is angry at the sellers and the real estate agents. He thinks that he should have paid less for his property or not buy it.

He is rightfully just to be angry at them. It should have been disclosed to him. The agents should have warned him that being close to a freeway there will be noise.

An advice to any buyer who purchases a new property. Always visit the property at all hours of the day. You are going to live there and spend many hours at your new home. Listen to the noises in the area. Some people are sensitive to noises and smells and will be miserable if they hear water, or traffic, or airplanes, or trains, or even dogs barking. You are investing so much money. For many of you this is your largest expense, invest a little time, it doesn’t even cost money. Go there, get out of your car and stand there or walk around the place. Talk to the neighbors. There is always a nice neighbor who would love to tell you everything about the neighborhood. Drive to your work place from that house and drive back as though it was your home. This way you’ll avoid aggravation and live happier in your new home.

We hear and read all these predictions and market analysis about the market in the Bay area and the U.S. Everyone claims to know what is going to happen and why.

Foreclosures and short sales are still here to stay for a while. There are still many homeowners who owe more money to a lender than the value of their home. Sometimes it is more than a $100,000 difference. Many home owners, in order to avoid an ugly stain on their credit history, try to sell their home in a “short sale”. They (or their agent) approach the lender who is willing to forgive some of their debt in order to cut his losses short. The lender might agree to get less money and avoid having to deal with foreclosure. There are many short sales everywhere. It’s a long, tedious process and if a buyer can cope with it he might get a house for a better price.

If you are looking for a house for your family in a good school area, namely Palo Alto, Los Altos, Cupertino, Saratoga and South Sunnyvale, you are in a totally different market. To my personal experience, all of the homes in the Cupertino school district that I submitted offers on or represented the seller within the last month had 4-7 offers and people offered up to 6% over asking price. Back in February – March of this year buyers offered 10-15% more than asking price to win a home. In Los Altos, a few days ago, a $2,395,000 house with 2294 S.f. was sold (all cash) for $50,000 over asking price. The asking prices remained the same. The difference is how much buyers are willing to pay over asking price. There are very few ’short sales’ in these areas because prices are holding strong.

There is a feeling in the air that the inflation is getting worse. Bernanke didn’t lower interest rates, and oil prices, food prices and everything else are getting more expensive. Mortgage interest rates are on the slow rise (1/2% last week and 1/8% yesterday and today it went down ¼%). You can expect either a rush to buy homes before interest rates rise even higher or buyers to be scared away because they cannot afford higher interest rates. It would be wise to watch the rates very carefully before locking the rates because they can change during the day.