Tuesday, August 12, 2008

Sunnyvale CA Homes vs. Fremont CA Homes

I live and work in Fremont CA. I used to live in Sunnyvale CA for most of my years growing up. So, when I took a listing in the Parkmont area of Fremont in July of 07 and got 2 showings in one month, (very low), I got a bit involved in some unique statistic gathering.

I wanted to find out percentage of turnaround in competing areas. Percentage of turnaround is the number of homes that have been bought and sold within a measurable duration of time. It's important to know because this figure will tell us what areas are moving real estate. What's more, is that turnaround determines both supply and demand. Measuring the number of homes for sale on the market is one thing, but measuring the number of homes purchased within a unit of time reflects the demand for the area and completes it's economical circle.

Putting some of the math aside, the basic concept is to count all of the listings that have been listed within the last 3 months (this is the duration that I needed at that time). Out of those listings of homes for sale in Fremont (for example), you then need to determine how many have sold during that time. You now have the first part of the calculation, the difference between the two categories. Divide the difference by the number of total listings, and you will have a percentage of turnaround. I have the results below for competing areas of Fremont CA homes for sale and Sunnyvale CA homes for sale.

It turns out the Fremont CA homes http://www.tricityhome.com turnaround during May 1st--July 31st, 2007 were measuring in at 14.7% (yuk). That means that out of 100 homes listed for 3 months, less than 15 homes sold in that time. The other 85 homes out of 100 sat on the market testing the patients of both seller and agent. As an aside, interestingly, the sellers viewed the agents as the first target for the blame. I was included in this, and it is understandable from a limited point of view. We realtors are the window to the real estate world for the clients. However, in short, Realtors were not the blame. Let's get back to the point. Sunnyvale came in at a whopping 47% turnaround. About half sold in 3 months and in 6 months, most of the rest were gone too. That's more than 3X more turnaround than Fremont--Sunnyvale kicked the pants off of Fremont. Were the realtors better in Sunnyvale? No. What made the difference? I have my suspicions.

My chief suspect is socioeconomic. Most of the homes purchased in Sunnyvale were surrounded by the demand for a location relative to the center of the technology industry. It's been the heart of the silicon valley since the 70's. It still is. Schools also played an important factor. Although Mission San Jose High School in Fremont is ranked in the top 10 nationwide, it only makes up a small geographic area within Mission San Jose High School's attendance map. Home prices tend to be inflated in the Mission San Jose area as well anyway due to homeowner perceptions of value relative to a school. Schools in Sunnyvale rank very high as well. Although it may not be safe to say that Sunnyvale just happens to have more "established," and "high tech" buyers than Fremont, conversations with other brokers in both areas tend to support this thought in part.

As a by product of the statistical study, we noticed that home prices stayed stronger in Sunnyvale and were not shaken in the negative direction by the economy. In Fremont, sellers and agents were quick to reduce home prices in order to create a demand and help bring in the buyer force. The sellers who reduced quickly, got their homes sold. The home in Fremont (the one from our office that prompted this study) did not reduce quickly enough. The seller did not feel it necessary to do so. Hence, it became a statistic of one of the 85% of homes that sat. In fact, it never sold. I did, however, sell one of its neighbors who reduced their price. I handed them their keys last week. For those in Fremont who reduced too little too late, Ouch.

by Jeff Pereyda
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A week and a half went by after the close of escrow on the cat pee house in Fremont CA. I went over my turn in sheet for my lock boxes and found that my combo box was still listed as being on the house with the cat pee.

Well, I had to go get it. I was a little apprehensive about going to the house because I new the cat pee was going to be there in part. What if the new owner was there? I drove to the house and saw some activity at the front door. The new owner was discussing something with what it looked like to be a contractor of some sort. Was I going to just butt in and say, "Oh, excuse me. I was the one who warned you about the cat pee issue? I just came for my lock box. Oooh! Is that cat pee I still smell?"

I made my way up to the walkway, and--Oh My G*d--I was hit all over again half way up the driveway by the putrid and oh so familiar stench that we thought $4,500. could get rid of.

I saw that the new owner had even torn up the old floor, got new windows delivered and a new door (where my lock box was). The look on the new owners face was not very reassuring.

She got a new door, I saw that the new owner threw away my lock box with the old door. It was on the old door, but was I about to approach and ask for my lock box back? I thought not. I turned on my heels and headed right back to my car and was never seen again at the cat pee house. Thank goodness I disclosed in the manner I did. If you are ever in a cat pee home, please be sure to consider the verbiage "material fact."

Definition: A material fact in real estate http://www.tricityhome.com is well-defined as a fact that, if known, might have caused a buyer or seller of real estate to make a different decision with regards to remaining in a contract or to the price paid or received.

by Jeff Pereyda
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Thursday, August 7, 2008

Cat Pee :
Material Fact?

Most of us I'm sure have somewhat of a working knowledge about what to do about cat urine smells. Many good products are now available to help rid us of the ammonia smell that gives can pee it's notoriety. But what I am about to share with you here was so devastating that it had to become a matter of "material fact." And, for your amusement, this is how it all unfolded.

Some months ago, I got a call from a homeowner who needed to sell her home in Fremont http://www.tricityhome.com and move out to Modesto. I arrived at the home in my suit and tie, and I was on my way to the front door when I was greeted by the Mr. "T" of cat pee smell. I hesitated, then knocked on the the door with the light-hearted (rat tatta-tat-tat tat tat). I thought perhaps the cat pee smell was from a stray cat lingering around the front door. Solutions to the problem were already being played in my head. "Ah ha," I said to myself. "The sellers were feeding a stray cat, so it keeps coming back and claiming it's territory by, well, peeing. Simple, remove the food, fix the problem, right?"

The door opened, and a nice elderly lady asked me to come in. I blinked (more of a twitch really) then paused, I had fully intended to oblige her request, but if I moved forward, I couldn't breath. The cat pee stench coming from inside the home had created a blockade so strong it was like a wall of fire. Amazingly, the seller seemed unaffected by the stink. Sinuses burning, I managed to lift my right foot then lean forward to enter into the pit of despair.

With what I thought was a smile on my face was probably more like a wince . I remembered that I would have to breathe in at some point after we were finished with the words of welcoming. It hurt a lot, when I breathed through my nose the first time. But, the alternative was not attractive either. If I breathed through my mouth, all that "vapor de cat" would go straight to my lungs without a filter of any kind. Which was worse? I had to breathe. I could only imagine the look on my face when that moment finally came. Turning away and wincing again as the poisoned air went through the nose, I managed to complete the next breath. Most of my thought was surrounded by the grim reality that the longer I stayed and breathed, the sooner I was destroying my bronchial system, and the seller, with destroyed sinuses was not phased at all. I did not want the listing. What I wanted was to get out.

But, as I listened to her story about wanting to be living with her daughter again, I felt as if I needed to help her. Twitching a bit more frequently from the smell and starting to get scared, I completed my walk through quickly and found evidence that four cats lived in the home. I also found evidence that they were actively peeing on the walls and not in the litter boxes. The 3 foot high plastic tarp on every inch of wall space was subtle, but I noticed it. What's more, standing floor fans blew in every room speeding the stench around the entire house, and to top it off, the air being blown about was humid which made it stick to your insides. "The house is extremely clean," she said. "we clean the floors every day. That's why we have the fans on to keep em dry." Clean perhaps to the naked eye, but in reality, I was truly trapped in a swirling cesspool of the strongest cat pee air ever known to man. I had to get out!

I imagined seeing visions of Fremont paramedics looking down on me from above lifting the air mask from me in relief saying, "He's coming out of it now. Give him a bit more oxygen." I closed my listing folder and left. I do not even remember what I said as I crossed back over the threshold. Fresh air began filling my lungs, and as I walked to my car, I found a new appreciation for life and my home. I immediately called my wife and told her I loved her and that I had to come home and change.

I called the seller from a safe distance some time later. I told her that the cat pee smell had to be remedied--which she quickly denied it was a problem. I gave her a list if items that had to be done. "We clean every day. There's no cat smell." She said. I deferred the issue, and she reluctantly completed most of the items on my list. Even though I did not want the listing, I took it. I wanted to help.

Speeding this story up a bit, the property was shown four times a week, and yes, I did receive some calls concerning the pee, not to mention the fans, the plastic, the cats and their unused litter boxes. Unbelievably, an offer was made that was enough money. I basically disclosed that the urine issue would have to be treated by an abatement company. And, in the TDS I had to add cat urine presence as a material fact--similar to disclosing about a meth lab. Even the general house inspector put it in bold type on the report concerning the cat urine odors. The seller felt it was not necessary to disclose cat the pee smell. We contracted a professional cat urine abatement co. for $4,500 to rid the home of the problem.

What was even more unbelievable was that it closed escrow, and the new owner moved in. It was all over! So I thought.

Check in tomorrow to read about a situation so embarrassing, I had to hop back in my car and leave my lock box as collateral damage.

by Jeff Pereyda
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Wednesday, August 6, 2008

How Long Does It Take to Wrap Up a Frog?

Two months and three days to be exact.

For those of you who are wondering about the connection between frog and house, I'll divulge briefly. I listed a home for sale in Fremont CA http://www.tricityhome.com. Because it was an average home for sale without the "distressed sale" factor, and we felt that it would be a good indicator of the recent real estate economy, at least for Fremont homes for sale anyway. A Tomato Frog is one of the most popular "indicator species" in our ecosystem (if you live in Madagascar). So, the home is the frog in a sense. Here's a quick redirect to the original article. We could have called the home a "canary" or attach a phrase to the project like , "let's raise that flag and see if anyone salutes it," but Tomato Frog just seems to have way more character than canary which is perhaps overused or the flag phrase which is patriotic, but not very fitting.

As of July 31st, the property has since closed escrow and now belongs to a new owner. Buyer and seller very happy. Did we do anything special? Not really. We did lower the price once from 508k to 481k. That's when the activity changed for the better. We received three offers over a brief period of one week. It sold for 460k. Most of the offers (2 others) were hovering at 450k. This was where we thought we were headed, but there was a last minute call from an agent who was on her toes. That last minute call was what we needed to create a demand and get 10k more for the seller and still be a fair market value.
So, to wrap it up, we feel that within the scope of this test, there is hope in this economy for motivated sellers. As for the shortsales, we have one in our inventory which has since received two offers and the lender is reviewing as we speak. We shall see.