Why Non-Parent Homebuyers Should Care About School Quality

Who’s thinking about school in the middle of summer, right? Well, I went to a neighborhood party yesterday, which was heavily attended by parents of toddlers, and the primary topic of conversation was where they were going to send the little ones when they grew up.

Our local schools, for the most part, are lousy. In fact, I probably wouldn’t live here if they weren’t. Low school quality is the very factor that allowed us, along with various other childless buyers, to afford a place here. So part of me was inclined to yawn and turn away at this topic of conversation.

Yet I was also watching the laws of supply and demand in action. If school quality doesn’t improve around here, or the parents don’t feel able to shell out for private school, many of these friendly neighbors whom I’m just getting to know will be moving in a few years.

If and when they do move, local “for-sale” inventory will rise – and other buyers will have to go through the “will we have kids, can we deal with the local schools, and if not, is it worth buying now only to have to move in a few years?” analysis.

For many, the answer will be no. For me, that will mean less neighborhood stability, and less home appreciation for my own abode.

If you’re a homebuyer currently scouting out the market, it really is worth having a look at how your local schools are rated, whether or not you have, or plan to have children. Fortunately, there are lots of great research sources for that, such as City-Data and GreatSchools.org.

Are You Ready for the World to Know Your House Is “Coming Soon?”

beesThe real estate world is buzzing with the news that the website Zillow is introducing a “coming soon” feature for houses advertised for sale. The traditional MLS doesn’t have such a feature (not yet, anyway). It will be open only to real estate agents who pay to advertise with Zillow. (Sorry, FSBOs, that leaves you out.)

So, up to 30 days before a house is actually available for sale, some sellers will be able to tell the world to start salivating over it.

My first thought is that this is like telling your party guests to wait on the front porch for an hour or two before you open the door. No longer do you have privacy when making those last cleanups (or even repairs), ripping out your weeds and feeble attempts at landscaping and replacing them with blooming flowers, or even putting up a fresh coat of paint.

No, the world will be watching. And if you’re in a hot market, believe me, they’ll be watching. Expect to see a procession of cars going by your house, cameras held out the window. (And those are the visitors who are sufficiently polite to stay off the property itself.)

Of course, my grumbling isn’t going to make this feature go away. If anything, it’s likely to become the norm. So, home sellers, get ready to be ready before you’re actually, you know, ready.

 

Luxury Homes Will Soon Be Less of a Bargain

House cornerOne of the fun things for buyers during the depressed real estate market was seeing almost unbelievably low prices on luxury homes.  (Who wanted to buy a castle with everyone in fear of a job loss or investment tumble next week?) Even if we couldn’t actually afford a mansion in the hills, we could peruse the listings without feeling like such a fantasy was completely and utterly crazy.

Unfortunately, buying a luxury home is swiftly returning to the realm of never-never land for the average buyer. According to the April, 2014 edition of Money magazine (“The sunny outlook for housing in upscale neighborhoods“), sales volume for expensive houses is on the upswing, the time it takes to sell is on the downswing in many parts of the U.S., and these factors will soon add up to price increases for high-end homes.

Sigh. You might console yourself by remembering that, even if you could afford the purchase price on a luxury home, other costs such as insurance, repairs, and of course home security might completely break your bank. See Nolo’s article, “How Much Does Owning a Home Really Cost?” for more on that.

San Fran Home Sells for $1.405 Million Over Asking?!

Paper house attached to yellow blank price tag on blue backgroundSeriously. You read that right. That bid brought the total price of the recently sold two-bedroom, 2.5 bathroom home on Gough Street to $3.4 million

I wonder whether there’s some other bidder out there who offered a mere $1.309 million over asking, and is now kicking himself for not having gone just a little higher? (Though what’s “little” in this context is relative, with every .1 million signifying a cool $100 thousand.)

While the article discussing this house on Curbed didn’t mention it, a price hike like this is a sure sign that a bidding war took place. (Either that, or some seriously misguided buyer thought a bidding war was inevitable or had money to burn.)

How, you might ask, did the buyer decide to go quite that high? Real estate bids are traditionally confidential. This isn’t like an auction, where everyone gets to hear the other offers and then raise their own bid by a bit.

But the buyers’ agents are allowed to, and traditionally do, ask the seller’s agent how many people have indicated that they plan to submit a bid. If it’s only one or two, the savvy buyer will probably bid something over asking, but not go crazy.

In the Bay Area, however, with a tech boom and a housing shortage, it’s not uncommon to hear of ten or more prospective buyers bidding on the same house. When up against that sort of competition, with only one chance to make your offer stand out, your best bet is to put an eye-popping dollar figure on it.

If you’re new to the real estate world, let this serve as an introduction to the fact that home list prices mean almost nothing until you understand what’s happening in the market where the house is located. Wouldn’t you think that a two-bedroom home listed for over $2 million wouldn’t require anyone to bid a penny more? But that’s the Bay Area market. Yours may differ! See Nolo’s article, “Home List Price: What Is a House Worth?” for a deeper discussion of this issue.

Undisclosed Real Estate Secrets Have a Way of Getting Out!

arrowheadIt’s a wonder that home sellers and developers continue to try to sweep evidence of issues concerning the property’s condition under the rug — or, in the case of the Rose Lane development in Larkspur, under some new pavement. Word always seems to get out somehow. 

As recently reported by Peter Fimrite in the SFGate article “Indian artifact treasure trove paved over for Marin County homes,” developer Larkspur Land 8 Owner LLC, though following the letter of the law (the California Environmental Quality Act) managed to conveniently arrange to have all the contents of a 4,500-year-old “treasure trove” of Coast Miwok life carted off and buried in an undisclosed location. The artifacts included human remains, tools, musical instruments, harpoon tips, spears, throwing sticks, and more.

Although the actions were done with the input of archaeologists and the oversight of Indian tribal members, the plan conveniently allowed the developer to move ahead with building homes and cottages that will sell at a starting price point of over $1 million.

Fimrite quotes a tribal representative as defending their choice of what to do with the objects, saying, “If we determine that they are sacred objects, we will rebury them because in our tradition many of those artifacts, be they beads, charm stones or whatever, go with the person who died. …” Obviously there are some difficult issues to balance here regarding who has an interest in and decision-making right over ancient artifacts.

But this blog is about real estate, and one of the more interesting points made in the article was by consulting archaeologist Dwight Simons,  who said not only that, “”This was a site of considerable archaeological value,”  but “The developer was reluctant to have any publicity because, well – let’s face it — because of ‘Poltergeist’.”

Whoa. If you don’t remember the movie “Poltergeist,” it was about a family in a housing development whose daughter is terrorized by ghosts.

Well, the developer’s got plenty of publicity now. I searched the article in vain to find any indication of who actually spilled the beans.

Will the shock of what was done to the property reduce its value in buyers’ eyes? Hard to say — plenty of homebuyers are desperate to buy in the Bay Area, and might not think twice about this. So perhaps the developers’ main worry at this point is that new homeowners will start hearing strange noises in the night . . . .  in which case, they might want to see the “Home Defects, Damages, and Insurance” section of Nolo’s website.

Enclave of Sex Offenders a La “Arrested Development” = New Real Estate Reality?

FINGERPRINTRemember that episode of the popular TV series “Arrested Development,” where a member of the once-wealthy family tries to unload empty houses in their development by selling them to sex offenders?

If you laughed then, you now need to solemnly admire the show creators’ prophetic powers. According to Inman News’s reporting on this topic by Teke Wiggins, the increasing accessibility of data on where registered sex offenders live could ultimately “herd offenders into enclaves, depressing home values in some neighborhoods and scaring away families with children.”

Here’s a bit of the back story. All the relevant data – for-sale home listings on one hand, addresses of registered sex offenders on the other — has been available online (and as apps) for a while. (Federal legislation known as Megan’s Law mandates that each state collect information on registered sex offenders and make it publicly available, though many states specify that the public may access the information only for certain reasons, and not for others. California, for example, prohibits using the database for the purpose of denying housing.)

What’s new and different, however, is that various online services have begun merging all this data – although in some cases later “de-merging” it, as RealtyTrac (a major U.S. source of real estate listings) did, possibly in response to outcry from real estate agents and industry insiders as well as some legal issues. (See “RealtyTrac Wipes Hyperlocal Neighborhood Info From Listings.”)

You could look at RealtyTrac’s latest action cynically and say that the real estate industry doesn’t want to promote any feature, however snazzy, that puts “sex offender” warning flags right next to images of homes where prospective buyers might have hoped to raise children.

In the blandest economic terms, sex offenders in the neighborhood tend to depress home values. In fact, according to Wiggins’ article (“Sex offender data threatening home values, tarnishing neighborhoods and frustrating real estate agents”), knowing where a registered sex offender lived pushed down home values by 4% for those properties within a tenth of a mile of the offender’s house, in North Carolina’s Mecklenburg County. That data is from a study done by Jonah Rockoff, associate professor of finance and economics at Columbia Business School.

The direst of warnings came from real estate agent Steve Clarke who, reacting to RealtyTrac’s initial data merge, stated, “This could literally bring down property values all over the United States.”

Yikes. But doesn’t Clarke’s statement cut both ways? If the U.S. is littered with sex offenders, then shouldn’t home buyers simply realize that it’s nearly impossible to find an area where everyone is sane and harmless? You could move to a “sex-offender-free zone” and still find local folks convicted of various other crimes as well as crazy neighbors who have 25 cats.

I don’t mean to minimize the fear that a homebuyer, particularly a parent, might have when considering the prospect of living near someone with a history of sexual assault, rape, or other such offenses. But as Wiggins rightly points out, there’s a “potential for sex offender data to mislead and spook consumers.” He details a story in which neighbors were spreading the news that a local 17-year old was a sex offender – but it turned out that his offense was to have had sex – apparently consensual sex — with his 15-year-old girlfriend, after which the girl’s father pressed charges. (In some states, a conviction for consensual sex, that is, statutory rape, can result in a registration requirement.) The young man’s actions hardly seems like the sort that should inspire panic and bring down local home values.

Wiggins also notes that the accuracy of sex offender databases is questionable. Changes of address may not be entered into the database for some time, if at all. And offenders often fail to register.

After talking to some criminal law attorneys, I can add a few more reasons why prospective homebuyers shouldn’t stir themselves into a frenzy looking at sex offender maps:

  • A minority of sex offenders commit subsequent offenses. According to the Huffington Post, “Contrary to popular belief, as a group, sex offenders have the lowest rate of recidivism of all the crime categories.” (See “Sex Offenders: Recidivism, Re-Entry Policy and Facts.”)
  • Not everyone who is charged with a registerable sex offense will end up on the sex offender registery. A good defense attorney will do everything possible to avoid an outcome that requires registration, a life-long duty that will limit the client’s ability to get jobs and housing long after any jail time has been served. Particularly when the prosecution’s case is weak, clients will enter into plea bargains to lesser, non-registerable offenses, like assault.
  • The most common sex offenders are the people you might least suspect. According to the organization Parents for Megan’s Law, “Most child sexual abuse, up to 90%, occurs with someone a child has an established and trusting relationship with.” Friends, babysitters, family members, coaches, and others are commonly identified in studies and statistics of child sexual abuse.

Not all of the above news is exactly comforting. But it points to a larger truth: We can’t completely isolate ourselves or our children from danger – not in the homebuying process, nor anywhere else. The best bet for parents worrying about their children’s personal safety is to teach those children what to watch out for and encourage them to talk to parents or other adults about any inappropriate behavior.

Mortgage Crisis May Be Over, But Look How Many Consumers Still Have Complaints!

telephoneBig thanks to real estate journalist Ken Harney for digging into some of the numbers put out by the Consumer Financial Protection Bureau (CFPB) — that is, the federal agency tasked with enforcing financial laws concerning banks, credit unions, and other financial companies, and dealing with consumer complaints.

Harney found that the CFPB received 60,000 complaints from homeowners in 2013 alone. Major issues included “messed-up escrow accounts, botched transfers of accounts, payment amount disputes, short-sale foulups, loan modifications and foreclosures,” and more.

I’m no numbers maven, but the number of zeros in that analysis can’t help but remind us that plenty of homeowners are still living with rotten mortgages that they or their bank rushed into during the heady days of rocketing real estate prices.

As for whether complaining to the CFPB gets you anywhere, don’t miss Harney’s account of how at least one homeowner succeeded in avoiding foreclosure by providing evidence of unethical behavior by the broker of a reverse mortgage.

And if you’re a homeowner at risk of foreclosure, be sure to see the relevant section of Nolo’s online encyclopedia.

 

Will a “Premiere Party” Help Sell Your Home?

mimosa iStock_000012039452XSmallThe trend-spotters at Oakland Magazine have been at work, with a recent article titled, “To Sell a Property, They Throw a Party.”

And not just any party: It’s a “premiere party” (usually for a luxury home in an affluent neighborhood), to which the real estate agent invites hundred of neighbors and other prospects.

They might serve champagne and hors d’oeuvres (will I ever be able to spell that without looking it up?) or perhaps chocolate chip cookies. They might create an art show with work from a local artist. One agent even commissioned a bagpipe player.

The odd thing is, most of the article discussed not what benefits parties like these offer the home seller, but what they can do for the selling agents, who — in the hot, hot, and already hotter Oakland market — find they’ve got to work hard to set themselves apart and attract clients. As one agent told writer Mike Rosen-Molina, “Listing agents are looking for tools that every agent might not have and ways to convince sellers to list their home with them.”

Okay, so do such parties really help sell your home? Especially given one agent’s acknowledgment that, “Buyers will see the home anyway; anyone looking won’t miss the property.”

The answer seems to be that such parties create a “buzz.” They get people talking, and create a sense that the property itself is an object of desire. And, while no agent quoted in the article came out and said this, buzz like this can lead to every seller’s dream: Offers over asking price, and possibly a bidding war.

 

 

Will This Year’s Real Estate April Fools’ Joke Be Tomorrow’s Listing Reality?

applesAnyone who didn’t read the “April 1″ dateline on Midwest Real Estate Data’s article called “MRED Makes Scents,” might have been shocked by this Illinois provider of multiple listing services’ announcement that it had “added a revolutionary new “Scent” field to all MRED property listings. The “Scent” field allows MRED agents to indicate the aromatic smell that prospective clients can anticipate when visiting their property.”

Meanwhile, just a couple of week’s ago — and not on April 1 — CNN came out with an article by Kieron Monk called, “Forget text messaging, the ‘oPhone’ lets you send smells.” That’s right, a new device (to be beta tested in July) will allow users to “mix and match aromas and then send their composition as a message, which will be recreated on a fellow user’s device.”

Just think, your real estate agent may someday send you a message saying, “You’ll love this house, just the place to bake a hot apple pie,” and then send you the corresponding aroma!

But is the oPhone going to be ready for the other most likely message? “It’s a fixer upper, but if we can pull up the cat-pee soaked carpets and give it a fresh coat of paint, I think you may have a bargain!”

Of course it will. The future is here.

They’re Tweeting About This House!

IMG_4987Well, it looks like a charming young couple was intrigued by the open house, and is moving into our “cottage.”

(When selling a house with less-than-impressive square footage, it’s important to use appealing words like “cottage” rather than “matchbox” or, God forbid, “birdhouse.”)

Like any smart homebuyers, they’ve done their looking around (two other places within sight of my kitchen window were visited and rejected) and conducted a thorough home inspection.

I believe they were then convinced by the following home features:

  • Room for a growing family. (The Oak Titmouse lays from three to nine eggs.)
  • Solid construction. This one was built by Berkeley Rustic Birdhouses, known for complying with the International Standards of Ornithology.
  • Security. Try as you might, Mr. Squirrel, you’re not getting your head in that front door.
  • Quiet neighbors. (Well, the neighbor’s dog does have it in for the postal carrier. Let’s say “relatively quiet.”)
  • Sunny location. But not too sunny.
  • Cleanliness. As is recommended, I removed the old nest last year and cleaned the inside with boiling water. Every responsible home seller should behave similarly. (With perhaps a little less of the boiling water.)
  • Proximity of restaurants, bars, and other amenities. The water in the nearby birdbath gets changed daily, and there’s an all-you-can-eat buffet of seeds on a nearby ledge. How’s that for a Walk Score?

I do notice, however, as the moving in progresses, that they occasionally have trouble getting their furniture in the front door. Next time I trust they’ll wise up and carry a tape measure.