Michael Walters' Blog

In a Hollister listing interview the inevitable question came up and I gave the answer I have heard myself offer more and more lately. 

     The question: “How much of a commission do you charge”? 

     The answer: “If your competing homes for sale are offering 2.5 or 3.0% to the selling office you should offer at least 3.0%.  The first sale you need to make is the Selling Agent’s interest in showing your home.  You want to do everything possible to encourage those agents to enthusiastically promote your home.  If you instruct me to collect a lower commission, half of which goes to the Selling Agent, they will see that lower commission when searching for homes to show their buyers.  We want to ENCOURAGE them to show your home.  A lower commission being offered by you while competing homes are offering more will be discouraging to them.

     “The home will sell itself – once the agent and their prospective buyers actually tour your home.  We just need to do all we can to make your home appealing to the prospective buyers AND their agent”.

This answer seems to resonate as a new thought with most sellers and typically the issue is settled.  Now!  If we could just find a buyer for this nice, upper-end home!  Anyone want a producing vineyard and nice home in the Spring Grove Area of Hollister?

When Ronald Reagan became president, Disco was hot, and home loan rates reached 19%!  Out of necessity agents became creative with financing for the few real estate sales being done.  One such tool was a “Wrap Around” or “Wrap”.  More home  sales closed because of  the development of “creative financing”; which typically turned out to be a Wrap.

Today, we again find ourselves in need of creative financing.  Up-scale homes, requiring ’jumbo loans’ are not experiencing the same resurgence as the lower cost, “conforming” group of homes.  In fact, homes with prices over $700,000 are selling at a much slower pace, if they sell at all.  Their prices are still falling while lower priced, ‘tract’ homes are rebounding.   It’s all about the financing or, lack of it.

Lenders are requiring at least 20% down from the buyer on prices above $463,300.  With the ‘Jumbo’ limit of $729,750 and minimum of 20% down many buyers simply don’t have enough cash.  Previously helpful, second loans offered by sellers must be over and above the minimum 20% cash from the buyer. ”Willing sellers and qualified buyers” (without 20%+ cash) for jumbo sales are being held at bay do to a significantly tightened lending atmosphere.

Even if an upper-end home finds a buyer with a large down payment good luck in the home appraising.  Lender’s are now being required to accept only those appraisals with 2 comparable sales within the last 90 days.  So, with fewer comparable sales, and dropping prices many higher priced home sales don’t close due to very low appraised values.

However, the “Wrap” is making a come back (more properly called an “All Inclusive Deed of Trust” or A.I.D.T.).  A willing and capable buyer can pay the seller’s price and avoid the lender limits and appraisal constrictions.  Additionally, since there are no lender fees the money normally spent on closing costs can be added to the down payment.

In the last 30 days I proposed 4 AIDTs for stagnant Hollister and San Juan Bautista up-scale homes.  Morgan Hill and Gilroy ‘Jumbo’ homes could also benefit form an AIDT sale.

When one of these AIDT sales records there will be a new comparable property appraisers can use to justify the higher prices nice homes should bring.  THEN, we’ll begin to see the ‘Jumbo’ home sales moving toward their earlier values.  I love problem solving!

In these Dog Days of Summer it seems like every other home I show in Gilroy lately has a pet door in the garage door entry to the home.  There is nothing more exciting than to have “Spike” come blasting through the door to check out who is in his home.

Gilroy, as well as virtually every other city, has a building code requiring that homes be built with a firewall between the attached garage and the home.  Many house fires begin in the garage so the firewall is engineered to impede a fire which starts in the garage from spreading to the home.  Most jurisdictions require the firewall to provide such a delay for up to two hours.

While making “Spike’s” life a little more convenient the homeowner who puts a pet door in the the door leading into the home from the garage may have problems collecting from their homeowners insurance where a fire began in the garage.

I find it interesting that many insurance agents say homeowners with such pet doors will still be covered yet home inspectors seem compelled to address this issue in their written reports.

Occasionally, a homeowner will cut the firewall for attic access or to install a drop down ladder.  They may face the same dilemma with their insurance company.

Building Code also requires that your garage-to-home door have a functioning, self-closing, hinge.  For obvious reasons that door needs to close so that the firewall retards the spread of a garage fire.  For reasons beyond me some homeowners disengage such a hinge.  Again, such a move may prove costly later.

So, why not check with your homeowner insurance agent and see what their position is on the doggie door dilemma.  We can check with the City’s code enforcement folks.  Sorry “Spike”.  Of course the standing rule remains: “caveat emptor”.

I listened to home inspector today as he  inspected a house   I sold in San Jose.  He was talking about the importance of smoke alarms and how most homes only have an “ionization” or a “photoelectric” type detector   but not both.  Up to that comment I had smugly checked off that my home had a smoke alarm and we were set. I realized, however, that I didn’t even know which type I had.  Then the inspector referred to some studies that suggest people can sleep right through the constant    pitch of a smoke alarms going off – almost like getting  used to “white noise” or constant background sounds.

Enter “alarm and voice” devises and variable pitch alarms.  The newest alarms  even talk to you: “Warning, Warning, Fire, Fire“.  Then they put out a variable pitch alarm.  When the inspector mentioned “the other type of alarm: “the CO2 detector” I knew I needed to get updated.  “You know that Carbon Monoxide is called the ‘Silent Killer’, right?.  Well there is an alarm for that too”, he offered.  While I vaguely remember thinking about that in the past I did not install a CO detector in my home.

I found  “National Fire Protection Association”  website to be very helpful.  I quickly realized that my home was not adequately equipped with the most up-to-date smoke detectors nor do I have enough detectors in my two story home.   I’m headed to Lowe’s for all three types of alarms.

How about your home?  I recommend that you go to NFPA’s website

A Monterey homeowner asked a question    which many sellers wonder about: “Should I replace our dated and worn carpeting  with l new flooring on the home I’m selling?”  The seller has been told “Yes” and “No.  Buyers will want to put in their own color and texture of flooring“.

This is topic which has no perfect answer. I find most buyers really want a “turn-key” home – one where they can simply move into it and live. Those same buyers often say, “we’ll change this, and that…” but, often take a long time getting around to it if they don’t make those changes soon after the close of escrow.

A  few enterprising buyers will, in fact, shop for a ‘fixer upper’.  Some have family and or friends in “the trades” and fully intend to do a complete face lift to the home they buy.  If the rest of the home is dated and in need of repairs  the seller will have spent money on carpeting that will likely be removed.

If the home is in otherwise good condition I would go with the odds and put down a complementary-color carpet. It does make a lot of difference in the ‘feel’ and ’senses’ of that brief tour the prospective buyer will take of the  home.  We only have one chance for a first impression.  The value of getting the home sold in a timely fashion vs. staying on the market a long time suggests that the cost of carpeting is really a cost of selling.

Regarding the cost – We have a nice relationship with a carpet store where they will allow homeowners to “bill escrow” with no costs or interest for up to a year.  This kind of relationship can make the decision a whole lot easier, right?

A prospective client is moving into our area from out of state and asked a rhetorical question:  “Does the lack of pictures on the web indicate poor quality of those homes?”  Well, yes and no.

No – “REO” and especially the “Short Sale” listing agents are often too busy to take more than one picture (sometimes none at all).  Occasionally, a solo picture of the front of the home is all the agent could squeeze in.  So the home might be fine.

Yes – there just may not be anything photo-worthy.  Since most of the homes on the market currently are Short Sale or REO listings and since many of these financially challenged homes are pretty worn finding a compelling shot may be difficult.

However, some listings will show 8 or 9 photos of the front and back yards and none of the interior…MESSAGE: there probably is nothing INSIDE worth displaying.  Also, have you noticed how forgiving a camera can be?  We often turn to one another asking:  “Yuck, is this the same house”?

So, after doing a Google Street Scene your best bet is to do your research on the location, statistics on the home(s) etc. from the web then, go out and look at several homes in the same afternoon.  Your agent will put together an efficient tour of prospective homes for you.  Not only will you see what the condition of the homes ARE and, could become, you will also get a feel for the neighborhoods.  “Seeing (in real time) is believing”.