Found a great article about the 10 successful tips for Flipping.  This has some great information in it and pertains to any market. 

In the Santa Clara County and specifically in the South County with communities such as Morgan Hill, San Martin & Gilroy, it is the high end that will yield the most successful flips.  It's hard to think about a $1million dollar fixer - but they are out there.

It's just not for the faint of heart - you are now Flipping with the big boys.

Webster’s on-line dictionary defines confidence as:

1 a : a feeling or consciousness of one's powers or of reliance on one's circumstances <had perfect confidence in her ability to succeed> <met the risk with brash confidence> b : faith or belief that one will act in a right, proper, or effective way <have confidence in a leader>

2 : the quality or state of being certain <they had every confidence of success>

By definition I can be confident because I can rely on the predictability of the Real Estate market.  It may go down a bit more but it will certainly go up again.  This economy is humming right along and there seems to be suggestions of pent up buyer demand.  What sidelines buyers is the evangelistic desire to buy at the very bottom. 

But what is the Bottom and when do we know it is the Bottom?

Only when the market starts going up again!

Someone who will only buy at the bottom will miss every market. 

Never mind that if they bought on the way down within 50% of the lowest low and held through the next highest high and sold within 50% of that high they would have gained equity and built wealth, never mind that owning a home is the last best tax deduction for most working families.  Someone who looks to purchase their home based on the bottom of the market is trying to time the real estate market, like the stock market, how successful is that? 
(Clue:  The Time is Now)

By definition I can have a true faith and belief that buying a house is a right, proper and effective way to provide shelter for me and my family.  There are many things that one can do with ones money and they may or may not have the ability to make more money, but I know that it pales in comparison to owning one’s own home.  There is something right and proper about owning the roof over your head and it is an effective way to provide shelter for your family.

By definition you can be certain that over time Santa Clara County Real Estate has been a solid investment.  That moving up in a down market it the best way to get more for you and your family. 

Which all begs the question – Why is their lack of confidence in the Santa Clara County Real Estate Market? 

I can only attribute it to wishful thinking on many buyers that the bad news in Milwaukee means something to Santa Clara County.  All I can say is that it has and we have seen the worst and now is the time to buy.  There are great bargains out there, but I predict sooner, not later we shall see more people entering into the market with more confidence, than the market will turn on a dime and the bargain hunters will not know what happened. 

The good news is that they will have a lifetime of stories about the house that got away and how much someone else made on that property.  You have heard them (I have been them), “I could have bought that property for $x!  Now look at how valuable it is!” 

My question to you is, do you want to tell the story or live the story? 

The one with the most confidence in this market is the winner. 

Be the Winner!

I want to relate two separate experiences my clients had utilizing the services of Lending Tree.

The first one was a past client who was in the process of refinancing her home.  She called the lender that she had used for the purchase - which by the way was a bit complicated and tricky.  Where timing was critical and where the lender - out of his own pocket - supplied a personal loan for the financial commitment needed for her to buy her dream home.  Namely the home she is refinancing. 

He quotes her rates, I do not know whether they are competitive, but I do know that he would have done the best he could have for her - since he had already done it once before.

Next she calls Lending Tree and gets quotes that are much lower, or so both of them told me.  I don't know what the numbers were but they were significant enough for my client to first go with the lowest Lender who cost her time and did not perform, the second one was a bit better - but then it came down to the end of a very long road the appraisal didn't come in as high as they needed it too so the second was a full point higher than what was quoted. 

Sad part was that I had located an appraiser whose opinion was different than the one that was used who could have found the value and could back his opinion with different data.  I don't want to leave you with the impression that we were in anyway trying to manipulate the data in any unorthodox manner; we just based the value on different criteria.  We are talking less than 4% between one appraisal and another.

Next -  

I have been in a transaction that time was most valuable and we were negotiation mainly on time, I represented the seller and we had agreed to a reduced price to get the time.  Well when close of escrow comes and the loan documents were not in, we find out that the buyers has decided to utilize the services of Lending Tree and we have problems that resulted in significant delays to my sellers, exactly opposite to what was agreed upon. 

The buyers relay a tale of broken promises along with unclear or absent communication resulting in them at the eleventh hour being presented with a loan that was doable but had a 36 month pre-payment penalty, points, and other related lender fees which were either not discussed, not agreed to or the commitment given these buyers was something much different than what the documents reflected. 

The resulting interest rate was considerable higher than the average rate everyone else was quoting at the time they began this process, with no points and no pre-payment penalty. 

The buyer's being wonderful, honest, happy, joyous people just wanted to start their life together in a wonderful house in a great neighborhood surrounded with wonderful people (namely me!).  The buyer's made the decision to accept a very different financial scenario then they first envisioned. 

My clients are wonderful, adventurous, intelligent people ready for a new challenge within their life together and are striking out on a trip that will forever enhance themselves and their life together.  It was very important to them that when they entered this stage of their journey they would leave cutting a clean cord.  But, they had to leave with this shadow over their departure.  A departure which was very bitter sweet, they wanted the adventure but they really didn't want to leave the neighborhood.  It had been a difficult decision for them.

Both these wonderful families are stressed to the max all because of someone in the lending business thought more about his money and what would work for him, rather than on the client's money and what works for the client. 

Next, I hear Rush Limbaugh promote and advertize for Lending Tree.  I understand the concept - make one phone call, oh so convenient, and let complete strangers, with no commitment to you or your financial well being and based on, what they call "competition" alone, not on the human element give you a simple number in which you can decide who will get your business. 

Shame on you Rush for not understanding that price is a bundle of benefits, not just a simple number.  A low rate with high points, closing costs and pre-payment penalties may not be the "best deal" for some.  Yes, you get to boast to your friends what a great rate you might have gotten - but at what cost.  Where obtaining a loan with an average rate with no penalties, low or no closing costs and no pre-payment penalty might be the better deal, in the short run. 

From what I have heard, again second hand, that the lenders Lending Tree connects you with motifs operandi is to get them in with an artificially low rate, engage them in a difficult process and slam then in the end.  Who cares - Viva La Loca (live the good life).  You will never do business with these people again, grab what you can when you get the chance.

Lending Tree was never directly involved with these experiences nor am I trying to say that Lending Tree did not do exactly what it was contracted to do - connect the end user with a group of lenders that may or may not be willing to compete on the most base of level - the number, and to screw the client on the terms.
 
The very slogan - When Banks Compete, You Win, truly begs the question on what field of play are they competing on, and the only logical answer is on rate.  Terms takes a second seat - deliberately I might suggest - so that value (for the lender/broker) can be built into the loan - while the end user - you! Pay more than what you could easily get from someone who quotes a higher rate but their fees or terms are much less expensive. 

I know that the math whizzes in the bunch might say that a lower interest rate will save you ba-gillions over the life of the loan.  They are right but the life of the loan could be 30 or 40 years.  Okay I grant them that - but you don't see the lion's share of the benefit on the interest side till about the last 15 years (or more - much more ) of the life of the loan. 

Now when did you have the same loan for 15 years?  I mean - wow - I change my hair every 6 weeks, I buy clothes every season, I need a new car every 4 years or so and I might sell my house and move within 10 years. 
IF NOT SOONER! 

So is Rate important or not.?

Yes and no. 

Below is a table that gives you a basis for the relationship between rates and fees. 

Ultimate Case = Low Rate - No Fees.
Great Case = Average Rate - Low Fees.
Not too Great = High Rate - Low Fees.
No so Bad = Average Rate - Avg Fees.
Bad = High Rate - Avg Fees
Run Away = Low Rate - High Fees

So, Lending Tree's lenders that they recommend can only compete on the low rate - high fee arena which is the worst scenario for the end user.

Does Lending Tree have a responsibility to understand the inverse relationship between rate and fees and advertize accordingly - I think not - but the end user should see the snake in the wood pile and be able to identify a Dirty Loan when they see one.

 

Where is our bubble ?

Countywide we are up 4.2%?  Communities like Los Altos, Saratoga, Campbell, and Mountain View lead the way, Where communities such as Morgan Hill, Santa Clara, Cupertino and Gilroy seem to be hit the hardest ? But what does hit the hardest really mean in dollars and cents.

The community of Morgan Hill has seen their home prices drop the most ? a whopping 3.2% which translates into $15,000 dollars.  Santa Clara is next with a decline of 1.8% or $12,500, Cupertino down .9% (yes less than 1%) or $8,750 and Gilroy is off $5,000 or .7%. 

May 2007 Medium Home Prices for Santa Clara County 
Compares May 2006 Medium Home Prices to May 2007 Home prices. 

Santa Clara County $  720,000  $  691,000 +4.2%
Campbell  $  760,000  $  707,000 +7.5
Cupertino        $1,005,000  $1,013,750 -0.9%
Gilroy   $  695,000  $  700,000 -0.7%
Los Altos  $1,680,000  $1,512,500 +11.1%
Los Gatos  $1,225,000  $1,180,000 +3.8%
Milpitas  $   640,000  $  620,000 +3.2%
Morgan Hill  $  760,000  $  785,000 -3.2%
Mountain View  $  739,000  $  701,000 +5.4%
San Jose  $  679,000  $  670,000 +1.3%
Santa Clara  $  665,000  $  677,500 -1.8%
Saratoga  $1,650,000  $1,485,000 +11.1
Sunnyvale  $  760,500  $729,500 +4.2% 
**From Dataquest and County Records.

When you see a headline Sales Down 25% - that does not mean the prices are down, just the number of people in the buyer pool is down.  Then you hear the blues about how rates are so high, but compared to May 2006  30 year fixed rates  (6.6 in 2006 vs. 6.26 in 2007) and the Adjustable Rates are also down (5.63 vs. 5.52).

Yes, there is pressure in the sub-prime market and we are seeing communities that were the most affordable and thus the most targeted for, what I like to call the Via la Loca loans (Just live the good life and don't worry about tomorrow), have been the hardest hit.   Yes, the guidelines for loans today have tightened up. Now you not only have to breathe but you also have to work and pay your bills on time.  All these things are great for the housing market. 

It's location, location, location and all Real Estate Markets are local.  Reading National News and applying it to our local market will keep you scared and out of homeownership your entire life.

Sales are down, inventories are up, it takes longer to sell a house in this market and you might even have to fix the Section 1 work and suffer through an open house or two.  But this is not the end of the world for Real Estate in the Silicon Valley. 

Once the buying public stops being scared witless by the press that glories in a bad Real Estate Market Story, we will see business as usual come back.  The question is, do you want to compete for your dream home with the herd that just figured out that living in Silicon Valley is about as close to heaven as you can get?  Or do you want to jump now before the pack and let the pack carry your values up to the next level. 

The choice is yours.  

As I am bumbling along looking for the Dirt on Real Estate - I found this site - The Real Estalker.  Where but in Hollywood would you find the combination of so much Dirt. 

If you want to know what Your Mama says - take the test drive.  It makes for some very interesting reading, things People Magazine(tm) would never tell you. 

Dear Concerned Home Owner –

Do you have one of the following loan programs - Negative Amortization Loan, Option Arm Payment Loan Program, or 2, 3 or 5 Year Arm Program on your Home?

Have you fully indexed or have you exceeded the maximum 110% or 115% of the original loan amount?

Has your mortgage payment doubled or even tripled?

Has the value of your Home dropped or decreased significantly?

Have you taken the steps to sell your home and it’s still sitting on the market and not selling?

Are you worried you are going to lose your home?

If any or all of the above are true about your circumstance then it is in your best interest to contact the Mortgage Lending institution that holds your loan immediately. The Real Estate Industry has been dealt a hard blow but there is good news.

First things first, there is NO fast and easy way to resolve this issue. It may take a few weeks from start to finish. You must be committed to follow-up and keeping notes of everything that has been communicated between the Mortgage Lender and You.

Remember Rule #1 – The Mortgage Lending institution that holds your loan is in it for the money, not for the home you live in.

Rule #2 - They do not want your home. They ONLY want your money.

Rule #3 - Lenders would prefer not to go through the foreclosure process, even if your home has significant equity. 

Remember they do not want your home. There is a way to negotiate with them, but you must contact them and ask what your options are.

Some lenders will put you into another loan program with an additional balloon payment or some other way to make up for your lowered payments. They do it for people in bankruptcy... why not you? Do not forget to ask for it in writing. This way you have the information at your finger tips at all times.

Some Sub-prime lenders will give you a grace period of 6 months by putting you into a payment plan and decreasing your monthly payment by about 25-33%, but this again is the tip of the mortgage program “iceberg”, you will have to pay it all back.

I had a client that was about to lose his home. His home wouldn’t sell and sat on the market for 5 months, even though it was significantly under priced and had a new master suite and chef’s kitchen. Today I cannot find him and feel that he must have lost his home.

I hope that he took my advice and contacted the Mortgage Lender, but I have no way of knowing.

REMEMBER – LOCATION, LOCATION, LOCATION

If you want your home to keep its value then you must remember where you purchased and then factor in the amount of time for a significant return. Those of you that have brand new homes and the majority of your neighborhood are for sale… You are in a real pickle, but there is hope.

This industry, just like the stock market, has highs and lows. Obviously this is one of the lows. REMEMBER I said “one of the lows” this can and will happen again. We will get through this time.  And remember the High’s are just around the corner.  Let’s hope that you have the staying power to move forward, even if it takes baby steps to make it to the other side.  Your Lending Institution is your partner, you want the house – they want the money.  You can work this out. 

There is always hope, we just have to look for it.

Please contact your Mortgage Lender today and see what process they are willing to negotiate with you. Do not be afraid of losing your home. You have the right to be informed of your options with your Mortgage Lender.

If you do not feel comfortable calling, write a letter specifying that you would rather be contacted by mail and ask what your options are. Make sure that you send your letter in an envelope that is certified by the United States Postal Service with tracking for your own records. If it is important to you to keep your home then you will pay the extra postage to make sure that your letter is delivered, even to a PO Box.

The United States Postal Service is the only mail carrier that will certify delivery to a PO Box and no one, not even a Mortgage Lender, is willing to become involved with the Postal Inspection Service. It is a Federal Crime to mess with the mail. The only catch to writing is that you may need to call in 15 days from confirmation of receipt if you do not hear back from your Mortgage Lender by mail.

Help!!   We need your feedback on what works with different Mortgage Lenders.

I was recently told that Countrywide would prefer to not foreclose on anyone, but I wasn’t given the details on how it works or what type of re-payment program they have set up. I’m sure that it is on a case by case basies. But we need to know so that we can spread the news before another families home is sold on the steps of city hall.

We are waiting to hear your negotiation success stories.

I am thinking of my dream home – could be my primary home or better yet a weekend retreat away from the pressures of life in the heart of Silicon Valley.  Somewhere close so we can be there within a reasonable amount of time.  Tahoe is too far and owning a home where is snows can be problematic and expensive.  I love the beach, but hate the fog, so the coast is out.  I really just want a quick getaway, a secret garden, a Shangri-la, a place of peace and solitude but I am not quite ready for Walden Pond. 

I just want it and I want it quick – I don’t want to have to drive too far and if I decided to stay over till Monday morning I could make it back to work with relative ease.  Plus, I can’t go much over a million.  Sounds impossible, not today and not in the South Bay, if you know where to look. 

There are two fabulous communities in Morgan Hill that fit the bill.  They are perched high above the valley floor, they are on city services for the most part, have spectacular city lights and lake views, privacy lots, but you will still know your neighbors, custom homes all within 7 minutes of the freeway, Starbucks and Trader Joes.  To call it San Carlos South is not far off the mark.  Only here you are in the Oak Forest on quarter acre lots or better.

Sounds too good to be true – think again, all you have to do is take a short drive south of San Jose to Morgan Hill and the beautiful hillside communities of Jackson Oaks and Holiday Lake Estates. 

Today I was holding open my listing in Jackson Oaks and I saw a deer walk across the driveway.  Since this is a view home with unbelievable panoramic views of the lake we are a bit high up.  I was eye ball to eye ball with a red tail hawk carrying a field mouse off to its nest.  I have seen foxes and wild turkey in the development.  I was sitting there taking in the view and the feel of the place, so tranquil and peaceful.  I’m glad on one hand that many people don’t know about these communities, but on the other hand getting a bit of Los Altos Hills, Woodside and San Carlos rolled into one for under a million dollars is a deal too good to hide. 

Within 45 minutes of Palo Alto these communities that will take you away from the work week and bring you back on Monday ready to create the next best thing that will revolutionize the world.  You can leave work on Friday, drive less than an hour, and as you travel to your private get away above it all your stresses will simple melt away being replaced by peace and tranquility.   Your biggest decision will be enjoying your home or exploring this lovely community.  Depending on when you pack up and head on out, you might still be able to catch the Street Dance Downtown held every Friday night during the summer. 

On Saturday, within a few minutes you can be strolling the Farmer’s Market picking up fresh fish, herbs, veggies, fruit and the sweetest strawberries imaginable to create the dinner to die for.  Don’t forget to pick up a few fresh flowers for the table. 

A bottle of local wine greets you as you enjoy the view from your outdoor patio.  New made acquaintances and old friends gather to celebrate the time together.  Sunday morning brings many choices to worship or a most civilized delivery of your paper of choice, a great cup of coffee and a breakfast to linger over.  Boating, horseback riding, wine tasting, hiking, sitting in an outdoor café watching the world go by are all awaiting you on a Sunday afternoon. 

The option of replaying Saturday with good friends, good food and good wine is always available.

Monday morning comes all too soon, but a short commute of less than one hour prepares you for the realities of your job.  But have no fear Friday is but 4 days away.

Sounds like what you work so hard to achieve.  It is well within your grasp, you just have to make it happen.  Drive the short distance some weekend and take a peak and let me know if this isn’t the most affordable and practical getaway for the busy Silicon Valley Entrepreneur.

 

Who says Silicon Valley is expensive.  I think it is one of the best bargains out there.  And with the recent correction, the savvy value buyer will buy now.  There is just not too many times in Santa Clara County Real Estate, well the Bay Area generally when the market takes a pause and breaths deep before it takes off and runs.  How long a pause and how deep a breath no one knows. 

But that really begs the question – would you rather buy in the pause or try to catch a moving target? 

Here is a list of the most expensive cities in the world and only one US city made the list and it’s not even on the west coast.  I looked at the list, love to visit – wouldn’t want to live there.

We live in paradise; we are the center of the known universe for technology, which drives the world.  We for the most part are smart, educated, interesting bunch of people pursuing the American Dream.  The weather can’t be beat, whatever recreation you desire there are world class venues within a 4 hour car ride, the scenery is beautiful and whatever lifestyle is your thing there are several communities to choose from. 

A good financial planner once told me you buy when everyone else is selling, and you sell when everyone wants to buy.  Don’t be looking back on this market wishing you jumped when you had the opportunity. 

Since the Silicon Valley became the Silicon Valley we have seen booms and busts, roughly running every 7 years with an average appreciation of about 7%.  Each low market (and this one is no exception) has never gone lower than the last low market and each high market has always gone higher than the previous market.  Every time we were in a low market there were economic factors that indicated that the highs would never return and the valley would never rebound – but it always did. 

Everyone waits for the precipitous drop in prices and it never happens. 

I am not trying to make light of the troubles in the sub-prime market, the worlds instability, the upcoming election, high gas prices and the fear of Global Warming.  I am here to say that with all that has happen and continues to happen in the world, the constant is that if you buy in the Silicon Valley and have a 7 year plan you have made buckets of money and if you have had a 3 year plan you have not been harmed. 

The bonus is living in this great area, in a great home, within a great tax shelter.  With interest rates around 6%, there has never been a better time to purchase.

I firmly believe that Morgan Hill, San Martin and Gilroy show the best opportunities, particularly in the high end.  More on that latter.

Today I went began a two day Lorna Hines seminar on Negotiations.  Never underestimate a powerful negotiator.  And what is more important to you than the best price possible either buying or selling.  During class one of the regulars, Anina, spoke about her experiences recently in selling her own home.  Dianna is a saint to of taken on that project and represented Anina. 

What I got out of the story was something that I knew from personal experience – a great realtor is in desperate need of a great realtor when they go to sell their own home.  I tried and it was a nightmare. 

We are the worst sellers because we know all that can go wrong and the better we are the more times it has happened to us.  We are not objective and the process – when you are going through it – is daunting.  I can’t believe we do this to wonderful people every day.   If we who have the license to sell a home and who are experienced and great negotiators need a great realtor, how important is if for the consumer?

I’d gladly pay whatever rate they require to get the best because they are worth every penny.  As I said before if Location Location Location are the three most important attributes in real estate than interview, interview, interview are the three most important activities you can do to find a great realtor. 

Interview agents at Open House, talk to people you trust and ask them, call the local brokerage and talk to the manager.  Tell him what your expectations are in an agent and ask him to refer one.  The more people you ask the better chance you have of the same name showing up more than one time.  I find that a positive sign – if the comments are universally positive, then they move up a notch, if the comments are universally negative, then I would be less then enthusiastic about contacting him, either way you know something important.

See what each has to say and judge for yourself.  For my money, I want someone who is a master at negotiations and understands how to get me more.

Just saw this post and wanted to pass it along.  A client comments on what she wants to see when she is looking at a property on the MLS.  Pretty eye opening.