You're in escrow, now what?

Over the last two weeks, I have been actively working with four sets of home-buyers who have each had some pretty intricate files.  For example, a few weeks ago I had home inspections on a stellar mid-century home in the El Cerrito Hills, (photos coming soon.)  During the inspection contingency period, we had half a dozen inspectors through the property at the same time.  It was a revolving door coupled with a time crunch as we had to move quickly to investigate the condition in a short time period (By the time the inspectors were available, we only had a few days left in our inspection period). The roof inspector, the chimney inspector, structural engineer and seismic contractor were there at the same time, grabbing my client Susan or Greg to update them on their findings. A few days later and by the time my clients removed their inspection contingency, (the period of time agreed upon to fully investigate the property and neighborhood.) they felt completely comfortable with the property's condition. This is not to say they had a flawless property, but that they had a property whose flaws they understood. So what happens after you have a home inspection?: A few things. You can remove your inspection contingency, if you feel completely satisfied with the condition of the property and secure in moving forward with the purchase. You can remove it subject to a repairs or seller credits. You can cancel your contract if there are serious issues and you are uncertain about the value or condition of the property. With another client, we had a hiccup during the financing contingency period.  However in the end, after hours of strategizing with my clients and their lender, we were able to successfully resolve the problem and close escrow on time.

When it comes to financing it is always the buyers choice on who to use for financing the property, be it a mortgage broker, credit union or bank.  I strongly suggest working with someone with a proven track record of success who is local.  In the situation above, I was able to contact this professional after hours in emergency situations to resolve issues and set a game plan.  In this case, if the mortgage lender was out of the area  or in a different time zone, this task would have been extremely difficult.  Additionally, because of my on-going working relationship with this mortgage consultant, there was a huge incentive for her to resolve this file with a positive outcome. (She knows client satisfaction keeps her on my recommended service provider list.)

There are two finance contingencies: appraisal and loan. The appraisal contingency should always give a buyer ample time to have an appraiser in the house, write their report and submit it to the underwriting department at the financial institution that is funding the loan. For example, say you are offering $500,000 on a house and you are obtaining 20% down conventional financing. The house will need to appraise at $500,000 for the lending institution to agree to finance the property.  If the house does not appraise at the price your offered, you can either: renegotiate the purchase price so the 20% down ratios work with the appraised value, cancel your contract, (as long as you have an appraisal contingency), or bring extra money to the loan to satisfy the difference in value. The loan contingency is the time period allotted to obtain a satisfactory appraisal, get loan approval from the financial institution that is funding your loan after further review of your finances and the house.  When you get pre-approved for a loan before you write an offer, you are screened by the mortgage consultant or broker to see that you meet specific guidelines for a loan.  Once you place an offer and it is accepted, then both the borrower and property is scrutinized before you have loan approval.

I am so happy that my clients were able to purchase the homes that they really wanted.  I hope the above information gives you some clarity into the process. If you have more questions, I am happy to talk.

September versus September

Here's looking at the Oakland and Berkeley real estate market September 2009 compared to September 2010:

September vs

Elmwood Glory

When I was thirteen, I took the bus to the Julia Morgan Center for my bi-weekly dance classes.  If I had the chance, I would stop by Sweet Dreams and spend a dollar of my allowance on super sour gummy candies.  The Elmwood was always an idyllic neighborhood to me.  Even at age 13 I loved the charm of the early 1900's homes.  The location couldn't and still can't be beat, close to everything!  UC Campus, Rockridge, BART, WholeFoods and the Claremont district of Oakland/Berkeley.

At one time the shops of the Elmwood were sparse, but within the last few years new life has created a rebirth.

Today, Labels had their grand opening, showcasing two stories of gently used and some new designer accessories, handbags, shoes and jewelery.

The Dailey Methodis another recent addition to the corner of Ashby and College,  offering  strength and stretching classes with a heavy emphasis on your core.

Ici is my favorite ice cream shop!  Yes, you might find me in that long line on College Avenue.

Summer Kitchen and Bakeshop, serves re-imagined take-away food.

The Elmwood Cafe, is the Ozzie's Soda Fountain reinvented.

Lola Home, was established in 2005 and brings inspiration to your to your walls, table and office.

What are homes selling for in this neighborhood?

Since January 1, 2010, a total of 10 - 3 (or more) bedroom, 2 (or more) bathroom homes have sold in the Elmwood.  With an average list price of $1,085,800 and an average sold price of $1,112,337, selling on average in 23 days.

Are You The All Cash Buyer?

The other day, I showed this property...perfect neighborhood, fantastic price, (bank owned) and potential!  There was one big problem, water damage.  I emailed these pictures to one of my favorite lenders and she said this damage could make it difficult to obtain a home loan. (If a buyer purchases this property with a loan, the damage might need to be fixed before escrow can close.)  Perhaps this home is the perfect property for an all cash buyer, one who is up for some work and doesn't have to worry about an appraisal or loan.  (Remember, you might be pre-approved to buy a house, but the house also needs to be approved too!)

What the Media is Not Telling You

It is a buyers market, right?  Foreclosures and short sales are on the rise,  so buyers get out and buy properties at rock bottom prices!  Well I will definitely not dispute the data that the news provides, but I will say in the Oakland and Berkeley area, I am seeing things that the news is not covering.

1.  There is a lack of quality inventory!  I believe sellers are afraid of this market and are choosing to stay put.

Homes in select areas such as, Berkeley, El Cerrito, Albany, Alameda,  North Oakland, Temescal, Rockridge, Crocker Highlands, Haddan and China Hill,  Sheffield Village, Oakmore, Dimond and various other districts of Oakland and are experiencing multiple offers due to the lack of inventory. These homes are often selling over the asking price. (If they are in good condition and are priced right.)

2.  The sweet spot price range is between $300,000 and $700,000 (This is the price range that the bulk of today's buyers are in.)

3.  Buyers are getting frustrated by the lack of quality inventory.

4.  Buyers have to feel that they are buying something of value.  So it is important for sellers to show off their homes properly, fresh paint, refinished floors and no clutter!

5. Buyers like homes that are move-in ready, but have room for their family to grow or areas that can be enhanced and improved.

6.   Original details are key, buyers like homes that show off their history.  Often homes that are completely gutted leaving no memories of its past get overlooked or are not buyer's first choice.

7.  FHA loans, loans that require a very small down payment of approximately, 5% down, accounted for about 30% of the transactions in the Oakland and Berkeley area last year, (this is an approximate after to speaking with two reputable mortgage lenders and speaking with my general manager about Red Oak's production.)  This is a good loan, if managed by a competent mortgage provider, but consumers should know there are many people out in this market place that have enough money to place 20% or more down on a home.  I am finding with many of my clients that family members are willing to loan or gift down payment money, as they feel real estate is a good investment and they want to help their children find a place to call home.

When you are ready to buy or sell a home, ask a real estate expert what is going on in your neighborhood.  Often the national and statewide statistics differ from what is happening locally.  If you are a homeowner and you are on the fence wondering if you should sell your home, perhaps now is the time to sell.   As always free to email or call me.  - Deidre  (deidre@redoakrealty.com.)

Rotten Rot

When you are buying an older house it is common for a property to have $10,000 - $20,000 worth of needed repairs.  If a seller has owned their home for many years often there is newly found damage that is discovered during an inspection.  In many cases it is not that the seller intentionally neglected their property, they just didn't know the damage was existed.  Inspections by quality professionals are key as you need to know exactly what you are buying.  Pictured below is rot in the wood framing of a home in the Oakland Hills.  I represented the buyers of this house and I was able to negotiate dry rot and termite damage repairs before escrow closed.  (The sellers paid the cost of the repairs.)  Before my clients moved in the wood was removed, new wood was installed and the appropriate exterior was installed to code.

Real Estate Update in Oakland and Berkeley

Berkeley:

• Sold properties Median Price $726k down from $762k in Nov 2008
• Sold units 43 up from 25 in Nov 2008
• Current for sale properties Median price $699k same in Nov 2008
• Units for sale 131 down from 159 in Nov 2008
• Months supply of inventory at 1.7 down from 3.3 in Nov 2008
• Days on Market at 65 up from 37 in Nov 2008

Oakland:

• Sold properties Median Price $254k up from $200k in Nov 2008
• Sold units 220 same from 219 in Nov 2008
• Current for sale properties Median price $235k from $188k in Nov 2008
• Units for sale 870 down from 1934 in Nov 2008
• Months supply of inventory at 1.8 down from 6.2 in Nov 2008
• Days on Market at 39 down from 61 in Nov 2008
• Median price in Nov 2007 was $400k

The Real Estate 411 in Oakland and Berkeley

The two charts, provided by Altos show this week in real estate in Oakland and Berkeley.  This is an overview so it includes homes in excellent and in poor conditions, (and every  neighborhood).  To get a better sense of the market, email me.  Some properties are still flying off of the market due to high demand and the lack of quality inventory.  - Deidre

The Importance of a Structural Engineer

When buying a home in the Oakland - Berkeley area you need to understand that our properties are sought after as many home buyers like that fact that that the majority of our homes are older with tons of charm.  When buying a house it is important to thoroughly inspect it before you complete the purchase.   It is not uncommon for homes to lie within earthquake fault zones or liquefaction areas, (liquefaction is  when the soil beneath a property is loose-sandy soil.)  Many homes have settled and have adjusted to the soil conditions that they are located on.  On occasion I can tell a property will need a structural engineer inspection as the home shows signs such a sloping, cracking or the way the house is positioned on a hill.  Other times it is less obvious and the  home inspector will recommend an engineers report.  When an engineer is needed, I am always fascinated by the findings of Dan Szumski.  Dan is incredibly knowledgeable and really knows are area, often he knows obscure facts about a location.  On one inspection at a Montclair property and told us that an old tunnel to Canyon was underground.  Another time he told me that a fault line ran under a street, (and after a natural hazard report was order, he was correct!)

The thought of an engineer inspection can scare some, but usually a good engineer will give real solutions for any deficiencies that he or she finds.  A few weeks back Dan told my client how he could do some of the seismic retrofit by himself and he even recommended using tools for the tool lending library in Oakland.  Inspectors are realistic about older homes and will advise when something should be repaired ASAP, or when it can be done over time.  If you have questions about a home you have already purchased you can always have an inspector come out and exam the areas that concern you.  Knowledge is key!

Foreclosures Within the USA

Often people ask me if I am still in real estate.  The media will paint a picture of doom and gloom.  I am not negating the problems, and yes people are struggling.  I think it will that sometime before the economy recovers, but this chart shows how resilient the Bay Area is.

Oakland-Berkeley Real Estate at a Glance

At Red Oak Realty, the real estate brokerage I hang my license, most of our agents were busy this summer!  At almost every weekly meeting  we would discuss the market and talk about the multiple offers that were taking place.  Red Oak has about 80 full-time Realtors and does a great deal of the Bay Area production.  A few weeks back my office opened 89 escrows within one week!  Last week, Red Oak Realtors were both the winning offer and the back-up offer for two properties for sale in Oakland.  I love working at an active office, the energy keeps me competitive and I am able to hear many tales of the East Bay real estate underworld. Attached is a chart of the Oakland-Berkeley market from mid-summer, (July 2009 in select zip codes)   To obtain current real estate data from a select neighborhood, email me, deidre@redoakrealty.com.

Oakland and Berkeley Area Homes by Region and Price

The blue areas on the map above = 3 bedroom, 2 bathroom homes priced above $800,000.

The dark brown area on the map above = 3 bedroom, 2 bathroom homes priced between $500,000 and $800,000.

Thelight brown area on the map above = 3 bedroom, 2 bathroom homes priced at $500,000 and below.

This chart applies to home prices in today's market.  There will always be exceptions.  The other day, I looked up all of the active, 3 bedroom/2 bathroom homes in 94602 zip code. (homes that range between $500K and $800K)  There was one home listed in the high $400,000's.  This home is a bank owned property and needs some work.  There were 3 homes priced over $800,000, but there have been on the market for over 2 months.  (a sign that they are over priced.)

Oakland and Berkeley Real Estate at a Glance

Berkeley:

                                  2009                 2008

Active Listings             138                    188
Under Contract            47                      35
Closed Sales                 38                      60
Average Sales Price   $828,624      $835,000


Oakland:
Active Listings             1052                   2286
Under Contract            363                     226
Closed Sales                  280                    201
Average Sales Price   $335,000        $492,000

Keep in mind the Oakland stats include all areas of Oakland.  To understand a specific neighborhood, I can do a custom report for you.  deidre@redoakrealty.com

Bold Style in Claremont Court, Berkeley

When I was a kid I always admired the homes in Claremont Court.  I imagined that these homes had extra large crystal chandeliers and wonderful food simmering in the kitchen.  As an adult, I admire the manicured yards, the classic architecture and the close walk to College Avenue and UC Berkeley.    What I love about 2729 Belrose Avenue in Claremont Court is the style that the owners boast.  Check out the bold colors, the eclectic decor , so unexpected and wonderful!  2729 Belrose Avenue is currently listed with Ruth Frassetto with GrubbCo.

Adjustable Rate Mortgages And The Threat of Default

This chart shows the number of properties that were purchased between 2004 and 2007 with Adjustable Rate Mortgages.  This chart breaks down the data by zip code.  The 94608 zip code an area that contains parts of West Oakland, North Oakland and Emeryville.  During the peak, (years 2004-2007) 30% of buyers purchased properties, (with 1-4 units) with an adjustable rate mortgage.  This equates to 1305 properties. This is not to forecast that all of these mortgages will go into default, but in this zip code home prices have declined making it incredibly difficult for one to refinance.  (When you refinance a home, the bank wants you to have equity in the property - at least 20%.  Meaning, if your home is worth $300,000 the bank wants you to owe no more that $240,000 in loans.)  If these homeowners mortgages adjust to an increased rate, it could make paying the mortgage tough. This coupled with job loss could affect the up coming short sale and bank owned property inventory.

The data in this chart is provide by Old Republic Title Co.  Information is deemed reliable, but is not guaranteed.

Yesterday's Buzz in Berkeley

Yesterday I held open 2218 Blake Street in Berkeley, a 1890 Victorian house near UC Berkeley campus. When I arrived at the house people were lined up early for look at this multiple unit property in the heart of Berkeley listed for $395,000.  I immediately opened the house and started talking to the crowd of people that formed on the old wooden front porch.  People wanted to know more about this house, this current real estate market and the state of appraisals.  At 5:30 p.m., an hour and a half after the open was scheduled to close, I finally was able to lock the doors. Here is the scoop. This property is 3 units per public record, but possibly just two units, but looks as if it was built as a single family home.  (This property is listed with my colleague Barbara Hendrickson and neither she, I,  or Red Oak guarantee this information, please go to the City of Berkeley to check on the legal status.)  This is a trust sale with independent administration, has tons of original details and is a fixer.  I believe this home will not qualify for FHA financing and after one Broker's tour and one Sunday Open House it has interested parties.    All in all about 100 people came to this Sunday Open house  as buyers are BACK and location is key.

Secret Mediterranean Casa in the Heart of Berkeley

20 Crystal Way in Berkeley is a tranquil home tucked away from Euclid Street on a small cul de sac.  In fact in all of my 38 years in Oakland and Berkeley I have never been on this street.  This sunny Mediterranean home has a scrumptious gardens, sensible upgrades and a great vibe.  Listed by Dee Knowland of Pacific Union for $1079,000,  I thought I would share this with you! 

Home Sales Statistics in Oakland and Berkeley

I thought I would pull some statistics for Berkeley and select zip codes in Oakland.  ( 94609,94610,94611,94602,94618,94619 - areas of  Oakland that buyers seek out.) To see what our real estate marketplace is doing over the past year. The graphs for Oakland include all 6 zip codes combined.