Cynthia Long

WOWSA – CAN WE SAY “EN FUEGO”? I THINK YES!
The $700-800,000 price range in Walnut Creek is moving! I’m hearing of lots of multiple offers and many properties selling in less than a week, causing a bit of a stir in real estate circles. Here are some details to put the activity in perspective, and as always, call me if you’d like to know more! 925-413-0044.

JUNE 2009 SNAPSHOT – WALNUT CREEK - $700-800K
In June, 2009, of 32 properties priced between $700-800K in Walnut Creek, 14 went pending (meaning an offer was accepted). Of those 14, five closed before July 1, giving us some factual sold data. This info helps demonstrate what multiple offers mean to a buyer/seller. Four of the sold properties closed at 95% of the asking price. One, 925 Stonehaven Ct (in Northgate – had a gorgeous kitchen!), sold at full asking price of $799,995, which represented $404 per square foot. The other four solds ranged from $367 to $384 per square foot.
The majority of properties that went under contract were on the market for less than 2 weeks (five were less than 1 week); two stayed on the market nearly 2 months, and both of these eventually took price reductions to sell.
Neighborhoods where this $700-800 price range are hot include Northgate, Walnut Heights, Rudgear Estates, and Parkmead. Most of these homes are 3 or 4 bedroom (with a couple 5-BR) with 2 or 3 bathrooms, ranging from about 1500-2600 square feet. For an immaculate property (needing little in the way of upgrades/modernization) to land in this price range, it is usually under 2000 sqft, though neighborhood does factor in heavily for Walnut Creek pricing.
One of the biggest reasons this is a hot market? Buyers can utilize FHA loans to borrow up to $729,750, and with their own 3.5% down, the sale price can be $756,000. Then, if a buyer has more cash for the deposit, they can reach to the $800K price with as little as 8.7 percent down. HOT!

GET YOURS WHILE YOU CAN… FREE MONEY RUNNING OUT
The Federal Tax Credit (up to $8,000) is set to expire November 30th, of this year. In the event of any update to extend this, I will hear from Mike DiMaggio of RPM Mortgage and will keep you posted.
No longer available… per the Franchise Tax Board, the $10,000 State credit (for new construction) has been filled, and no new applications are being accepted. http://www.ftb.ca.gov/individuals/New_home_Credit.shtml

LOAN MODIFICATION
This one is close to my heart because I have many friends who must make some serious life decisions about home ownership. Many have asked me about loan modification programs, counselors, when and if they should hire someone to represent them, etc. I wish there were easy answers. If you or anyone you know has to go down this path, please listen to this interview from Tuesday, 7/7/09, with Michael Krasny of KQED. He asks questions of people who are very astute in the industry to address loan modification concerns.
http://www.kqed.org/epArchive/R907070900
Panel includes:
• George Duarte, legislative chairman of the East Bay chapter of the California Association of Mortgage Brokers
• Kamala Harris, San Francisco District Attorney.
• Kevin Stein, associate director of the California Reinvestment Coalition, an organization that advocates for equitable access to financial services for low-income and minority communities
• Pedro Nava, member of the California Assembly, District 35.
• Wayne Bell, chief counsel at the California Department of Real Estate.

Loan Modification… If You Can’t Take the Heat…
Many of you have asked me about loan modification services. Last week, I attended a risk management seminar with Shannon B Jones (http://www.calrealestatelaw.com/profiles.html) , one of the best real estate attorneys in CA. Her perspective is that the loan mod business is in its infancy in 2009, comparable to where short sales were in 2008 and REO sales were in 2006. That means that every lender has its own rules, there is little oversight, and there is little predictability to how a modification will be handled. This is particularly true in cases with a second, when dealing with recourse loans, or when the property owner has assets beyond the property in question. Still, many people must find out if loan modification is an option, as it may be preferable to losing the property all together. Here is a government website that gives you several financial tests re: eligibility. http://makinghomeaffordable.gov/modification_eligibility.html
Once you’ve done your research, remember, HUD-approved housing counselors can help you evaluate your income and expenses and understand your options. This counseling is FREE. 1-888-995-HOPE (4673)

$8000 Tax Credit
If you are a first-time homebuyer, you may qualify for the $8000 tax credit if you purchase before December 1, 2009. To learn more:
http://www.federalhousingtaxcredit.com/2009/home.html

Bridge Loans to Use Tax Credit in Your Purchase Transaction
There have been rumors of monetizing the $8000 tax credit so that it can be used during the transaction (either in addition to the minimum 3.5% down with an FHA loan or for closing costs). This credit would be handled as a short-term bridge loan, and the lender can charge up to 2.5% interest to loan the money. We haven’t seen this in action yet; however, it is of interest, and here’s a Q&A published by the National Association of Homebuilders. http://www.nahb.org/fileUpload_details.aspx?contentID=118003

Do You Need Local Stats?
Empire Realty has added a great tool to my website, www.cynRE.com. These are market trend reports for every area of Contra Costa County. With one click, you can see price per square foot, average days on market, median price, and inventory, broken down by city/zip code.
http://www.cynre.com/infotopic.asp?InfoID=50
I always think this is helpful for an overview. However, if you are looking for a specific property type, neighborhood, school, etc, call me!!! I can give you the micro-details that you need to buy or sell. 925-413-0044

Downtown Walnut Creek – Property Changing Hands…
At What Price??? For all of you who enjoy speculating on the values happening in Walnut Creek’s commercial district, here’s an article from 6/23/09, Contra Costa Times, citing some very interesting local transactions. Kinda makes me hanker for some frozen yogurt in this great summer heat!
http://www.contracostatimes.com/top-stories/ci_12673707

(Cynthia Long, reporting from Walnut Creek, CA. February 12, 2009) So the good news is, my buyers have found a property they really want, and they and the sellers have agreed to the price and terms in the contract. We’re going to open escrow. At the closing table, one of my buyers turns to me and says, “Okay, now we’re in that inspection contingency period you keep talking about, right?” I’m proud of her. She’s a first-time buyer, and she’s completely on top of all the steps in this transaction.

Together, we review CAR Form BIE, Buyer’s Inspection Elections, dated 11/2008. In this form, there are 31 inspections (see below for the complete list) that I will advise this couple that they must either elect or decline during their inspection period.

The beginning is easy. The seller has agreed to cover the cost of the pest inspection, which will discover wood-destroying pest damage or indicate where further tests are required. My buyers will be present at the inspection, and they will listen to the inspector’s synopsis and ask lots of questions. Then they will have a written report to review in detail. We’ll expect that the seller will cover the repair costs of Section 1 damage (visible evidence of an active infestation) and then the buyer can make judgments about Section 2 (condition exists that is deemed likely to lead to infestation ). Once the buyers are comfortable with what they know about the condition of the property after the pest inspection, then we bring in the home inspector.

The home inspector, whose work is paid for by the buyers, will look at the whole property, from underneath the floor to the roof. My clients will get a thorough review, verbal and written. We’ll focus on the areas where the home inspector advises repairs and/or further inspection. These areas are generally around structure, plumbing, roof, and chimney. For the buyers’ comfort, we add these one at a time, making sure they’re still invested in the property before they outlay cash for the next inspection.

However, these 31 different inspection elections that appear on the BIE do not come out of thin air. These contract forms get created because buyers or sellers in the past had transactions that went south (to say the least) over lack of information during the inspection contingency period. When people find out information about a property after they’ve signed off contingencies, they say, “If we would have had that information, we would have made a different decision.” Battle lines get drawn, and everybody loses.

To protect my clients, I ask them to consider the information that would be derived from each of these inspections and decide if they want professional recommendations on any of these aspects of their property before they commit to purchase. By this time, they are educated enough to either elect or decline each inspection.
• General Home Inspection
• Wood Destroying Pests
• Chimney
• Electrical
• Heating / Air Conditioning
• Lead Paint
• Plumbing
• Square Footage
• Structural
• Easements/Encroachments
• Foundation/Slab
• Lot Size
• Boundaries
• Pool/Spa
• Roof
• Sewer
• Septic System
• Soil Stability
• Survey
• Tree/Arborist
• Well
• Water Systems and Components
• Radon Gas
• Formaldehyde
• Asbestos
• Methane Gas
• Mold
• Permits
• Public Records
• Zoning
• Government Requirements

People sell because they want to live somewhere else, they need a home that functions differently, or they need to cash out equity. They often have a general idea of how they want to price their property, either because of what they owe or because they’ve been tracking sales in the area. At this point, it’s time to call me, the Realtor.

Being a Realtor means you are responsible for doing the reality check. Before going to the property, I get a handle on the sellers’ financial position, and I work out a net sheet based on comparable sales in the neighborhood. How much money do I believe the sellers can walk away with? When I meet with the sellers, I listen to their goals. My dream homeowners have plenty of equity, are motivated by life circumstances to move, and are well-aware of the challenges in the marketplace.

I need to learn more about them to know how this is going to work.

First, I want to see the home through the sellers’ eyes. I will ask, “Will you show me the house exactly as you’d like for a buyer to see it?” That 10-minute walkthrough is the time to hone in on intuition. Do the sellers see assets and flaws objectively? Has this home been loved or will there be deferred maintenance to address? Is this a friendly consultation to test the waters or are these sellers absolutely determined to go to the next step in life?

When we get to the table, there is always the question, “What do you think my house will sell for?” And the response: “The question isn’t really what your home will sell for, but ‘What can the buyer buy instead of your house?’”

Sometimes, even though the sellers are realistic, it’s still hard to face the numbers. So we go through exercises like these to come to an answer. I pose the questions, and the sellers think about how they are going to respond – not to me – how they are going to respond to the market.

1. First, you are at the mercy of everyone else’s motivation in this market. And there are many who are selling because they have to, not because they want to. Those properties are affecting your value. How do you want to respond?

2. Your listing price is an invitation to make an offer. If you have it priced too high, those who are your real buyers won’t see it, and those who are currently shopping in this price range won’t bother to write an offer. How do you want to respond?

3. What percent of inventory is selling right now while you are on the market? If the answer is ten percent, do you want your home to be the number 1 pick of every 10 homes on the market?

4. Your home is in a depreciating market. If you knew your home was going to be worth $1.2M in June, would you take $1.35M today?

It is the sellers’ job to select the price. I may have a range that I believe the home will sell in. We’ll talk about pricing at the top of the range and the possibility of a future price reduction. And we will talk about pricing low, seeking immediate or even multiple offers. Absolutely, the marketing and exposure will fall to me. The sellers and I will agree that the two ingredients to a successful sale are marketing and price.

Then if we all agree that their motivation and my skills are in alliance, we make the plan to get the property ready for showtime, plan out the schedule for when they want to hand over the keys, roll up our sleeves, and go!

(Cynthia Long, reporting from Lafayette, CA. January 12, 2009) It’s 2009, and the opportunity to buy homes in neighborhoods that were once out of your reach is upon us. I am working with a buyer who has always wanted to live in Lafayette, California, an East Bay suburb, and for him, THE TIME IS NOW. His full-time job is secure; he has a second job that has grown from hobby to serious income; and his current mortgage is almost completely paid off. And, importantly, there are single-family homes in Lafayette priced around $700,000, which he and his mortgage broker have identified as his sweet spot.

Last week, he and I visited 9 properties – 4 were in Lafayette and 5 were in the Saranap area of Walnut Creek. He wanted to see value and pricing in neighborhoods that are geographically similar but in different cities and school systems. Within two hours we narrowed the field to two houses, both in Lafayette, both bank-owned properties (REO), and both 3-bedroom/2bath, between 2000-2400 sqft. Other than these similarities, these were two completely different houses in two completely different types of neighborhoods. One was a remodel on Moraga Road that had a sense of being pieced together with available resources over time; the other was a dated 3-BR home nestled in the hillsides behind Acalanes High School. My buyer had hit that bottleneck of two viable choices in the right school district and needed the clarity that comes with asking (and answering) real estate questions.

So, we applied the following.

1. Neighborhood and lifestyle. How close are you to neighbors? Do you want a “drop-in” lifestyle with ties to neighborhood events and lots of interaction or do you value some seclusion?
2. Roads. Do you have any concerns about noise or children or pets being near a busy road? How easy is it to get in and out of your property or the artery roads that lead into town? Do you have traffic obstacles like schools on your most common commutes?
3. Flat lot. Sloped lots, even with retaining walls, can carry histories of drainage issues. This is particularly of concern in an REO property where there will be no disclosures from the seller about property history. Obviously, once in contract, the buyer would do soil stability inspections, but we were looking for ways to eliminate a property before going into contract.
4. Cost. My client and I met with a contractor at the properties to get some off-the-top feasibility and cost estimates on expanding two of the bedrooms and updating two bathrooms on Moraga Road. We also looked at building an interior stairway from the garage to the main living area on the second property.
5. Value. Many of the homes that are “deals” in 2009 have gone through partial remodels, have unusual floorplans, or are just plain old and worn. Buyer beware of overlooking or dismissing flaws. As fellow Empire Realty agent Cindy Aiken said this morning while discussing this decision, “Equating funky with charming may generate a smaller buyer pool when your client becomes the seller.” Cindy has a very PC way of phrasing the obvious.
6. Future Buyer Pool. One of the ways I’m able to help my clients analyze this is to research how the property fared in the past, particularly in the booming markets of 2003 to 2005ish. The answers to these questions will put the property’s long-term value into better perspective.
a. What were the transactions like when this property was sold in the past?
b. Were there local, reputable Realtors on both sides of the transaction?
c. How long was it on the market?
d. Did it sell at, above, or below asking?

These questions are developed to narrow choices and mitigate risk, especially when looking at the property as in investment. Once these factors were weighed in, we were left with the big one: Where did he really want to live? I asked my client to visualize driving by and seeing someone else living in the home. Which property gave him the bigger sense of loss as he saw it belonging to someone else? He realized he had a much stronger emotional response to one of the homes. Because we had identified the property’s value flaws, he was able to weigh the risk/reward and make a decision. Now just to complete escrow, and he will live in the Lafayette home he’s been dreaming of!

If you are ready to take advantage of the amazing opportunities in today’s marketplace, call me. We will go on the grand tour, eliminate the properties that don’t work, and get you into your dreamhome in 2009.

Cynthia Long 925-413-0044 clong@empirera.com