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.

I was having an email exchange with somebody about county taxes which are due in the next few days.

Here is what we talked about

Dear David

The seller pays his taxes according to the county assessed price. If it’s a house that was purchased 45 years ago for $28,000 (ha, ha,) her yearly payments should be around $600. Proposition 13 is protecting homeowners from a big raise in tax payments. Not more than 2% a year.

When you buy that same house for $1.1M (I am giving you an actual example from reality) your taxes will be about $13,200 a year. You would have to pay it in 2 installments one by December 10 and the other by April 10. $6600 each.

When you buy the house the county takes time to adjust the prices and you might benefit (temporarily) from that by paying what your seller paid, but be sure that the county will remember you and ask you to pay for the adjusted price. That would be the assessed price. They should send you a letter with the amount that you need to add on top of the original payment and probably let you pay it in 2 installments.
Have a great day!

Miri

—–Original Message—–
From: David

Thanks Miri for the answer. I should check this HUD-1 document.

What are the supplemental taxes? Aren’t they included in the Property tax?

Thanks,

David.

On 4/3/08, Miri Bialik <mbialik@interorealestate.com> wrote:

Hi David, if you just closed on the house there are 2 options:

1. The escrow company calculated your taxes and charged you through escrow and

you are good until November 2nd (becomes delinquent by December 10th)

2. The escrow company didn’t charge you but gave you credit for the time the

seller owned the house and it’s your responsibility to pay.

The answer will be in the HUD-1 document – the closing statement.

Most probably they have already charged you but it’s your responsibility to

make sure that you paid your taxes. The penalty for not paying on time is brutal.

———- Forwarded message ———-

From: David > Date: Thu, Apr 3, 2008 at 3:16 PM

Hi Miri,

Thanks for the information. If I start to own a house on Feb 29,2008

then when my property tax is due?

Thanks,

David

On 4/3/08, Miri Bialik <miri@miribialik.com> wrote:

Hi,

If you own Real estate property make sure you paid property taxes by 4/10/08.

Property taxes were due Feb 2nd and they become delinquent if the county

does not get them by 4/10/08. The penalty is painful.

Always at your service, Miri

My client won the house, competing with 3 other buyers. The seller was so happy. The offer was:”as is”, no contingencies, 3 weeks free rent back, great price, all that for the luxury to own home in Sunnyvale. My client shopped around for the best loan. First he was going with a mortgage broker who promised him the best 30 year fixed conforming loan he could get. Then he found a B of A lender who was willing to get him 5 year arm for 5% (with 1 point). What a deal! The mortgage broker could not match that rate and my client was going to do the loan with B of A. 2 days later the original mortgage broker found a 30 year fixed  for 5.25% with a 1 point buy down. They locked that rate which disappeared that afternoon. The B of A lender could not match that loan and the buyer, being a conservative borrower preferred the 30 year fixed.

A diligent broker has to be on top of things, check the rates a few times a day and be in touch with many lenders.

So you have decided to sell your home and chose your favorite agent. You are working on preparing your home for sale and beautifying it but in the back of your mind there is always the nagging question, how much shall I ask for it in order to get a good strong offer?

Pricing the house is the marketing strategic. In different times you would use different marketing styles.

In a seller’s market you can comfortably price it low knowing that you’ll generate many offers and get wonderful offers, well beyond  your asking price, but in a transition market like now, you can dream about the good old times and hope for many offers.  Price your house as close to what you think you can get for it realistically. You do not have the luxury of pricing low and get $100k over the asking price with 2 month free rent back and ‘as is’ sale.

For example, Sunnyvale real estate conditions can vary from one neighborhood to another. In Homestead high school area you can still play with the low pricing. Everything sells there. In North Sunnyvale it can’t be done. Together with your agent you can weigh and analyze the local market and set the list price. Cupertino also varies from one neighborhood to another. Monta Vista High school area is still hot while other areas with less desired schools take longer to sell. Price your house as close to the market price but not too high. If the house is priced too high agents and buyers lose interest, the property becomes “stale” and you’ll end up getting less money for your property.