Silicon Valley Real Estate Blog - 1SiliconValley.com

There it was.  The orange house.  The bright orange house.  The newly-painted bright orange house.  The neighbors stood aghast as they watched each stroke cover more of the nondescript color, the one nobody could remember now.  That lost color may as well have been green because they couldn't imagine themselves living next to the Great Pumpkin, much less convincing someone else to pay for the privilege.

This story doesn't happen to come from Silicon Valley's real estate circle but it's an illustration of individual property rights.  Whose, though?  As you can see, the story is different if you're the painter or the onlooker — and because Silicon Valley has such limited space geographically, what one person does with their property often affects many others positively or negatively.

When you purchase a home in a homeowners association (HOA), you get a set of benefits in exchange for your monthly HOA fee.  (See the article The Impact of Homeowners Associations on Purchasing Decisions.)  But you also explicitly agree to play by the set of rules established by the HOA, in the cryptically-named CC&Rs: it's covenants, conditions and restrictions.

For many people, judging an HOA by benefits versus the monthly dues is sufficient.  Others prefer to pay a lower HOA fee for fewer services.  It's a topic deep enough for there to be companies that specialize in evaluating homeowners associations, but with an hour or two of scanning and reading HOA documents, usually included a home's disclosure packet, you can evaluate how well an HOA will work for you.

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Aug.16.2007 [ Filed under: Home Buyers, Silicon Valley News ] 2 Comments »

When is a $900,000 home more expensive than a million dollar home?  When the $900,000 home comes with a $533 per month HOA fee.  

If you bought a one million dollar home in Silicon Valley using a 30-year fixed-rate principal and interest mortgage with a 7% interest rate and 20% down payment, your monthly payment would be $5,322.  The same terms on a $900,000 Silicon Valley home would be $4,790.  The difference per month? $532.

The HOA provides a number of conveniences and economies of scale to its members but it's also important to remember that payment itself is important.  (Like your mortgage, if you don't pay your homeowners association dues, you can lose your home, so the HOA payment can be thought of as just as important as your mortgage payment.  Though unlike mortgage interest, these HOA dues aren't tax deductible.)

This has two implications for my clients.  The first is clear: you can afford a numerically more expensive home if it has a lower HOA fee than one that does, or conversely a home is less affordable if it has a higher HOA fee; the trade-off is that you'll have to pay for the services the HOA would have provided.  The second is that the HOA has a real impact on the resale of your home (a good HOA is a plus) so it's important to evaluate the services an HOA provides relative to the HOA's monthly dues.

After all, HOA fees vary from association to association, from a nominal $25 to over $800 in some parts of the Bay Area, and the different homeowners associations provide different services (at different efficiency levels) to their members.  For my clients, the key questions are, where is your money going, do you value it enough to pay for it, and will it be worth it to the folks you hope to resell your home to?

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Aug.10.2007 [ Filed under: Home Buyers ] 4 Comments »

Not prejudging.  Some things are pretty easy to quantify: number of bedrooms, number of bathrooms, price range, and cities.  Then when you plug those parameters into a home search, you can usually find a pretty long laundry list of homes that meet the criteria you put in.  What's difficult (actually, impossible) to tell the real estate search engine is why you chose those parameters.

You have reasons that are important.  It might be that you need the extra bedroom as a home office, or that you'd prefer another master bedroom because you have a lot of house guests.  It might be that when you come home from work, you want to feel like you're in a completely different world, but actually have only a ten minute Silicon Valley commute.  It might be that your child has special needs and that school district provides an exceptional environment.  It might be that you need a prestigious address in order to maintain or establish your status in your profession. 

Some reasons are easier for my clients to talk about than others.  (See the article Determining Your Must-Haves When Buying a Home.)  And that's the reason why I feel it's critically important to look at your home search from your perspective, without bias or judgment.  After all, ensuring your goals are met (and that delirious happiness that I'm always referring to happens) first requires a discovery phase of sorts to develop a true understanding of the issues at hand.

My clients often ask themselves a number of questions before they contact me and I'd like to share with you some of their thought process.

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Jul.31.2007 [ Filed under: Home Buyers, Silicon Valley News ] Comment Here »

It's not the tone of their voices or any perceptible shifting in their seats.  My clients are pretty good at what they do and there's a certain confidence that comes from that.  But no matter how many times you've done it before, it's still a big step. 

There's the unknown: you may never meet the sellers to understand how they've always made sure to grease the garage door or kept the bathroom tiles consistently dry.  You might not even be from the area and have a clear picture of how different Palo Alto and East Palo Alto are, much less whether Cupertino, Saratoga or Portola Valley would be a better fit for your family.  

Plus, there are the large numbers involved.  Silicon Valley real estate has high prices compared to most places in the U.S.  It's the price homeowners pay for the combination of the opportunity, the weather, the culture, and being a road trip away from the Pacific, San Francisco, Napa, Lake Tahoe, Yosemite, and even Los Angeles.

Just add public speaking, heights and spiders to the unknown and large numbers, and you've probably rounded out the top five list of people's biggest fears.  Some are so afraid that it keeps them from making decisions they know will make them happy.  (See the article Emotions in Real Estate: From Fear to Elation.)

I believe an important part of my job is empowering people to make good decisions — ones that help them achieve their goals and aspirations — in the face of stressful situations.  And, here, preparation is key.  My clients can help by ensuring their finances are prepared.  (See the article Preparing Money for Buying a Home.)

But another way of becoming empowered to make choices that help you achieve your goals is to understand some of the tools which we can use to help protect you in the process and what value you can expect in return if you decide to waive their use.

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Jul.19.2007 [ Filed under: Home Buyers ] 3 Comments »

1SiliconValley.com has provided map-based searching for homes and real estate across Silicon Valley and the Bay Area for several months now.  We've recently added several new features that I hope will make your home search more convenient.

Based on your feedback, we've added a details page for each search result that shows all the available pictures of the home as well as its property description.

We've also added an advanced search feature that allows you more flexibility in choosing the parameters of your search, such as specifying the style of home you're looking for.  You can then save properties into a "shopping cart" so that you can easily refer to them again.  Or, you can save that search and have an email alert sent to you when new properties matching your criteria are listed. 

Thanks for reading the Silicon Valley Real Estate Blog.  Please try out these features and let me know what you think.  Also, don't forget to download The Silicon Valley Home Buyers Book if you haven't already, and contact me for your real estate needs.

Jul.15.2007 [ Filed under: Home Buyers ] Comment Here »

It was Starbucks today.  Sometimes it's a living room.  Other times it's their favorite restaurant for lunch.  Real estate, especially with prices like we have here in Silicon Valley, involves some critical decisions that are sometimes stressful to think about, so I try to help my clients feel more at ease any way I can.

That means sitting outside with a cup of java, for example, isn't all that unusual.  There's something about being across a desk or meeting in a conference room under florescent lighting that makes people more tense than less. 

Today was an especially important day.  We were submitting her offer tomorrow.  We anticipated multiple offers but didn't know how many there'd be.  This home was in an extremely popular downtown area and the last offer we'd submitted here wasn't the one out of six. 

Obviously, she was a little disappointed, but we talked about how much she was willing to pay, and the possibility that someone else would just be willing to pay more for that piece of Silicon Valley.  You can't predict or control what other people are going to do, but she was satisfied that she gave it her best effort based on our preparations and analysis.

Since we wouldn't know how many offers there'd be until tomorrow, I prepared two different offers for her to sign.  We'd submit the one with a higher price if there were three or more other offers.  She knew the answer to, "How much would I pay?" — we'd done the research, analyzed the comparables, and decided what was really important to her —  but the answer to "How much should I pay?" could only be found by walking in the shoes of the seller and their listing agent.

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Jul.09.2007 [ Filed under: Home Buyers, Real Estate Stories ] Comment Here »

"I believe we'll want to work with your clients," she said as I stood up from the conference table and extended her a firm handshake.  Those were the code words I was looking for and I knew my Silicon Valley client would be a very happy woman in a few hours, especially since she paid less than her reservation price!

There were two other offer packets in her hand, one had been faxed in, its sheets arranged haphazardly in a manila envelope.  The other was presented earlier in the day, stapled into a standard company folder by that buyers agent.  The listing agent put the other offers down on the table, flipped through my binder again, and smiled.  "I'll touch base with you this evening."

I want to give my clients every possible advantage and I waited until the last possible moment to present the offer.  Waiting is a common, but not always widely-used tactic, on the day when offers are being presented.  It's especially useful if the listing agent has you on their radar but doesn't proactively call to tell you how many offers they have.

It wasn't the waiting that was our advantage, though.  As I sat in this Silicon Valley brokerage's reception area, I thought about the listing agent's offer to let me fax our packet in.  Sure it would have been faster but I wouldn't be able to look her in the eye and explain our case when she first read the offer.  I double-checked the two offer binders in my case while my mind quickly flashed back from the ad slogan about never getting a second chance to make a first impression.  Smiled a little, wondering where that came from.

My clients and I had already gone over what our plan was but I had the second binder just in case.  We knew they had priced this Silicon Valley home "well" because its asking price was slightly below the relevant comparable sales (of similar quality real estate) within a half-mile radius.  We had to be prepared to compete with multiple offers: the question was, "How many?"

I pulled out the binder we were going to use.  If my client's offer were presented this morning, we may not have known about the faxed offer.  If my client's offer were presented an hour ago, we may not have known for sure about the second one.  The reason why I wait isn't to surprise the other party, it's to get as much information as possible for my client to make better decisions.

So how did we choose how much to offer in each binder?  And why was the thought process different from how we figured out the maximum she was willing to pay?  My clients and I walk in the shoes of the seller and their listing agent.

Jul.06.2007 [ Filed under: Home Buyers, Real Estate Stories ] Comment Here »

The words will sound like they make perfect sense: "If we make an offer, we should make it to win."  Even though his eyes were scanning the path from the patio, through the living room into the kitchen, his expression was motionless as he finished his sentence.

It was coming towards the day when offers — we anticipated several — would be presented to the seller.  We'd already walked the home both during the work hours and at night, on a weekday and on a weekend, to see what the neighbors were like and experience what the character of this house was during different times. 

But that sentence was taken out of context.   During our search, we'd seen numerous homes throughout Silicon Valley's Peninsula and South Bay. 

One had a loft-style upstairs work area, where he began to rattle off everything from how he'd arrange his bookshelves to where his PC would go.  Another had a combined living and dining area, which he paced back-and-forth for about twenty minutes mentally replacing the staged furniture with his.

He liked this home enough to come back several few times, but he never talked about the inside, only the neighborhood (which we both knew he coveted).  And after a few questions, he realized the truth: he really didn't like the home itself all that much. 

If that's the case, should he make the offer to win, given multiple offers on this Silicon Valley home?  The real questions are: How much do you really want it and how much are you willing to pay for it — especially when buying a home is inherently emotional?

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Jun.23.2007 [ Filed under: Home Buyers, Real Estate Stories ] 1 Comment »

I've updated my book on buying a home in Silicon Valley with what the Silicon Valley real estate market cycle has looked like over the last decade and how to prepare your money when buying a home.

Thanks to everyone who's written kudos for the book on its download page and the initial announcement.  Since it's first publication on May 1, 2007, the Silicon Valley Home Buyers Book has been downloaded just over 1,000 times!

Jun.17.2007 [ Filed under: Home Buyers, Silicon Valley News ] Comment Here »

It's out there.  And if you're going to spend more than a quarter of what you make each month on it, we're going to find the right one for you. 

But it doesn't end there.  The process of buying a home in Silicon Valley is considered by a lot of folks to be stressful — and part of the stress comes from the shrouded mystery of the process itself.  Some people want to know all the details behind the process, others just want to know what the terms are and where they need to sign.  But neither wants anything to go wrong.

The process simple to talk about.  From a buyer's perspective, finding what you're looking for is the first step.  After which, there's making an offer and getting it accepted by the seller.  Then, come the appraisal and inspections.  And if everything checks out, you're ready to lift any contingencies, write a check for the down payment, and get your keys.

Simple!  Wink.

Which is really the crux of the matter.  It's simple to talk about but there are a lot of moving parts.  My clients know, though, that I grease the wheels and let them know where they have both the control and influence to help the process go more smoothly.  It's not always easy but there are ways we can make it less stressful. 

After all, buying Silicon Valley real estate should be simple, and it starts with a good property search.  (I'll cover the other phases in future articles.)

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Jun.13.2007 [ Filed under: Home Buyers, Silicon Valley News ] Comment Here »