The great COVID migration

You may have read conflicting articles about the mass “COVID migration,” in which big cities are seeing people flee to more affordable areas in the midst of the pandemic. As far as I can tell, those claims are a little bit exaggerated, even if the Bay Area as a whole is still seeing people leave.

man in blue shirt and gray pants standing beside man in blue shirt

For example, this Bloomberg article tells us that fewer people are leaving big cities overall since the beginning of stay-at-home orders, even if interest in moving is rising again. That said, some big cities (namely New York City and San Francisco) are getting more out-migration than most…and many of those people are migrating towards other large cities like Seattle and Los Angeles!

This does seem to mean that some suburbs and more affordable large cities will likely see home values rise soon. Even if young adults are leaving certain cities, they typically are not doing it because of that city itself, but because they want to try another big city out!

And though it may be true that large corporations, including some based in Silicon Valley, are leaving California for cheaper pastures like Texas, there’s very little indication that it has anything to do with desirability in our state as a whole. While cost is definitely a factor, the rise in remote working during COVID has definitely prompted people to leave the Bay Area at a higher rate.

person using laptop attach to vehicle near green leaf plant during daytime

So what does this all mean for you? If you live in a San Francisco condo, it means prices have dropped about 10% per sq. ft. Rents have also dropped, but the younger folks still gravitate to the city, so if you don’t have to sell right now, maybe wait. If you have been renting at the cities high rent rates and shelter in place means you are about to strangle your family as you need more space, then people are looking to the east bay where prices less that is a relative term – they are less then buying in the city and you get more space. The people who are moving out of the city to Walnut Creek or Sacramento, are driving prices up willing to pay in cash over the appraised value, because it seems relatively cheap or cheaper for them. If you currently have a condo in the east bay, they are sitting much longer. This is because rates are so low, and with no HOAs to pay, people qualify for a house, maybe not in the city they originally wanted i.e. Walnut Creek, but can get on in Concord or Brentwood. This is happening all over the United States. Austin TX, for a second year in a row has the hottest housing market in the country. I have seen friends that are retiring move out of California to TN, ID and Nevada. Having said all that the Bay Area remains a very attractive area to home buyers, and even with a slight uptick in move-out traffic, I don’t expect that to change anytime soon! As a side note, I do think California will need to get friendlier towards attracting and keeping business’s in the bay area and address the rising homeless population especially in San Francisco.

Clarifying the Rate Quote

My friends at JVM Lending put together a list of misleading rate quote tricks that I think you should be aware of. Here, I offer my clarification based on their blog. You can see more from them on their website. Read on…

From JVM: We recently had a borrower come to us with a ridiculously low rate quote for a “no cost” loan from one of America’s largest mortgage banks. The borrower insisted it was legitimate and asked us to match it, so we asked to see the other lender’s Loan Estimate, or “LE.” And, sure enough, there were $9,000 of points buried in the loan.

The loan officer was offering a loan with “no out of pocket” costs, meaning that he had merely increased the borrower’s loan amount by enough to absorb ALL of the points and nonrecurring closing costs. The confused borrower, however, thought she was getting a “no cost” loan.

Yesterday, we had another borrower come to us with a ridiculously low rate quote for a 75% LTV cash out investment property loan; the loan officer had simply misquoted because he missed all of the “hits,” or rate-increases that are associated with such a loan. In any case, the above instances prompted me to write another blog about the tricks and/or mistakes lenders make when quoting rates. Here are a few rate quote tricks and mistakes:

“No Cost” vs. “No Out of Pocket”

This is a classic ploy and it is what happened in the above instance. A true “no cost” loan means that the lender covers or pays all of the nonrecurring closing costs or one-time fees (title, escrow, appraisal, under writing, etc.) on behalf of the borrower. With a “no out of pocket closing cost” loan, the lender still charges the borrower ALL of the standard closing costs (and points in many cases); the lender, however, increased the loan amount by enough to cover all of those costs so the borrower does not have to pay them “out of pocket” at close.

“No Cost” vs. “No Points/No Fees”

Many lenders quote “no points and no fees” loans, when it really only means no lender fees (“big banks” are notorious for this). Borrowers still have to pay for their appraisal fee, escrow fees, title insurance fees, notary fees, etc. These fees can easily add up to several thousand dollars, making “no fees” quotes very misleading.

Quoting Non-Existent Rates

Some lenders quote rates associated with very short-term lock periods (under 7 days for example) that WILL only be available once a loan is fully approved. So, if rates increase between the date the loan is submitted and the date the loan is approved, the borrower is out of luck. Similarly, many lenders also underquote rates during a borrower’s pre-approval stage, knowing they will not be held accountable to that rate because the borrower is usually weeks or even months away from going into contract – when the actual rate lock will be necessary and the loan officer can then say: “oooh – sorry dude, rates have gone way up…”

Quoting Without A Full Scenario (credit score, LTV, property type)

This is a painfully common trick, too. There are as many as 12 factors that affect every borrower’s individual interest rate, as set out in this blog. Some loan officers purposely misquote before knowing all of these factors in an effort to reel in borrowers, knowing that the actual interest will likely be higher once all of the factors are known. The loan officers simply hope they can convince the borrowers that the mistake was innocent and that the borrowers will not want to endure the time or cost (especially if they pay for an appraisal) that going to another lender might entail.

Manipulating Annual  Percentage Rates (APRs) and Closing Costs

In this blog called 5 Misleading Closing Cost Tricks Big Banks Play, I illuminate a lot of closing cost tricks lenders play.. These tricks include understating prepaid interest (which makes APRs artificially low), property taxes, and hazard insurance. Lenders also sometimes understate 3rd party fees and eliminate “owner’s title insurance” altogether.

What should borrowers do to avoid these tricks?

They should only use lenders with stellar online reputations and reviews; make sure they are getting quoted rates that can actually be locked, and go over their Loan Estimates with a fine-toothed comb.

 From Kristin: Give me a call, and I’ll refer you to a reputable lender…like JVM! It is also hard to compare lenders because of everything noted above. If you have a bad lender the whole transaction can go south, so what I look for in lenders are ones that provide a fully underwritten approval or a DU (desktop underwritten) and ones that I don’t have hiccups with, they consistently perform and finally ones that I know are honest about the rates they are quoting.

A little bit about Prop 19

This year, voters in California passed Prop 19, which potentially can changes the financials in a positive way of your next home sale or purchase. The proposition will go into effect in mid-February of 2021, so below is a summary of details. Some things the legislature will still have to interpret some of the language.

Inherited Properties

All reassessment exemptions for inherited properties only apply if the property is used as a primary residence by the child (or sometimes grandchild) or used as a family farm. In cases in which the current market value of an inherited property exceeds the parent’s taxable value by more than $1M, the child’s taxable value will be assessed at the current market value and reduced by $1M. The State Board of Equalization will adjust the $1M amount of inflation beginning February 16, 2023, and every two years thereafter. 

Transfers

As of April 1, 2021, previous restrictions based on location will be removed, allowing eligible (meaning people over age 55, victims of wildfires or other natural disasters (and the severely disabled) homeowners to do a few things. First, they can utilize the transfer multiple times; they can transfer the taxable value of a property up to three times in their lifetime. Natural disaster/wildfire victims will be allowed to transfer once. The language around what constitutes a natural disaster still needs to be defined.

This group can also purchase a property of higher value, meaning the tax bill will go up but by a lower amount than for other buyers. And, finally, they can also move anywhere in California by transferring the taxable value of a primary residence anywhere in the state within two years of the sale of the original primary residence.

If you’re interested in the details of Prop 19, here’s a great resource from the California Association of Realtors that might answer all of your questions!

GUEST BLOG – From Finances to Moving: How to Upsize in Retirement

By Bob Shannon

A lot of seniors think they have to downsize in order to live comfortably in retirement. But this isn’t always the case. If you plan on having your kids and grandkids visit or take up homesteading, a smaller home simply won’t do, and you’re going to need wide-open spaces to make those golden-year dreams come true. These upsizing tips can walk you through the process from start to finish with less stress and hassle.

Budgeting for a Bigger Home in Retirement

As with any major purchase, you need to think about your budget and finances first before you decide to buy a bigger home. If you have a sizable amount of debt, you will want to start by coming up with a feasible plan to pay it down or completely off. In many states, consumers can turn to debt relief agencies for help coming up with this plan. You’ll need to factor in your amount of debt, employment situation, and ability to make payments to figure out which solution is right.

Once you have your debts paid down, you should have an easier time qualifying for home loans. You’ll also want to determine how much home you can afford before you begin submitting those applications. While this may seem like a daunting task, there are plenty of tools available online that make it simple, including calculators and worksheets.

Finally, you will want to figure out how much you will get from the sale of your current home. You can reach out to an experienced local real estate agent for a CMA (Comparative Market Analysis), but you also need to factor in any needed repairs into your estimated profit. For example, if your windows are cracked, repairing them could cost you anywhere from $170 to
$375. However, repaired windows can add curb appeal to your home, making it a worthwhile expense.

Finding Enough Room for Retirement

Now that you’re done with your finances, you can start looking for a home. You can check out local real estate sites or blogs like Walnut Creek Lifestyle for tips on searching and buying, but you may also want to start by hiring the right real estate agent.

A real estate agent can also narrow down home choices to ones that include the features you want most in retirement. For instance, if you plan on homesteading and hosting family members, a larger yard or land may be necessary. Then you will have plenty of space to play with the grandkids or grow your own vegetable garden and raise livestock.

Depending on the sort of hobbies you plan on taking up, you may also want to look for a home that includes a shed or workshop. You can always add one later, so long as you have the extra acreage. Also, make sure the features inside your home will keep you and your loved ones comfortable for years to come. This could mean making sure there’s an extra room that can be turned into a playroom or smart home features that can be used for aging in place.

Planning a Safe and Stress-Free Move

Once the deals are done, you’ll need to plan for a safe and problem-free move. For seniors, this may mean hiring professionals to help you pack and move your belongings. Otherwise, you could end up overdoing it and injuring yourself trying to do it on your own.

You can use an online move planner to figure out when to start hiring pros and when to take care of other essential moving tasks. That way, you won’t forget anything crucial, like changing your address with the post office or using up the food in your fridge.

When you have bigger dreams for retirement, a smaller home simply won’t do. If you do plan on upsizing your home, do make sure you know which steps to take to avoid added stress. Most of all, make sure you find a home that fits you and your plans to help you make the most out of your golden years!

If you want more information on upsizing, downsizing, or Prop 19, contact Kristin Lanham at (925) 899-7123 or kristin@lanham.com.

Prop 19: Vote YES!

I tend to avoid posting anything remotely political on here, but today I have to urge all California voters to consider voting YES on Prop 19! The biggest reason,  allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment. This means you don’t have to buy a house less than the one you sell. This could also help our housing shortage, because many seniors may now decide to sell their bigger homes and down size. I realize many may have already voted, for those who have not yet done so, this one is a no brainer.

Two new listings!

I just put two new listings on the market, and I’m excited to share some information about them! Check out the photos and videos below, and give me a call if you have any interest (or know someone who does) in buying in Walnut Creek!

2196 Walnut Blvd.: This gorgeous lot and great location is located just down the road from Walnut Creek Intermediate. It is on a flat, half-acre lot, retaining its secluded country charm. The home was under construction when transferred to the successor trustee, and the family decided to sell as-is.

There is a separate in-law unit that needs finishing touches to stay in while constructions finishes, and the addition includes a bonus room and unfinished master suite that totals approximately 1,000 square feet. There is a 4-car garage, too. Can’t beat this location! Listed for $1,275,000. Call me for all the details.

3124 Lippizaner Ln.: This 3 bed, 2 bath, 1,964 square foot townhouse in the Trails End community near Northgate High School offers walnut hardwood floors, vaulted ceilings, an atrium, and two sliders to access the high-end back deck. The backyard views (looking over the open space) can’t be topped.

This townhouse is freshly painted and has new carpets, granite counters, and two built-in’s for extra storage. Enjoy the wet bar, wine fridge, and multiple entertaining spaces. There is a community pool, tennis courts, and Equestrian Center. You can see pictures and a video here. Listed at $890,000.

Just Sold: 729 Katydid Ct.

I recently sold a beautiful home at 729 Katydid Ct.! I’m so happy for my Coast Guard clients. One was stationed in Alameda and the other out towards Bodega Bay, so in 2014, they decided to buy in Martinez. A year ago, they were transfered to Virginia, rented the house out, but after one year decided to sell.

Virginia was much cheaper and they got a huge house with acreage. Serendipitously, I was able to connect with them on a recent trip to visit my son who lives in Norfolk, VA. We had a wonderful lunch at a rooftop restaurant and they have jokingly told their colleagues that their real estate agent came all the way from CA to meet with them!

All in all, we had five offers. It was listed at $620,000 and sold for $645,000. They were ecstatic with the results and as you tell by the pictures, staging helps tremendously especially with showing restrictions because of COVID-19. Video also helps buyers get a full perspective before deciding to book an appointment.

Just Listed: 5371 Saddlewood Ct. (Concord)

Just listed on Friday: This beautiful 1,368-square foot home in Concord! This is a 3-bedroom, 2-bath house built in the 1970s on .18 acres. It is in a prime a cul-de-sac location with desirable schools nearby. Substantial interest in the home is driving an offer date of Wednesday, Oct 7th at 12 pm PT. There is still a Bay Area inventory shortage, and with low rates, we have a seller’s market. Enjoy the video tour!

8 home selling mistakes to avoid

Opendoor published and article back in 2019, I was able to “edit” to be more current about mistakes to avoid when selling your home. Here is my version:

Half the battle of selling a home is anticipating problems before they come up. Selling a home is a major life milestone, and it can be complex when you consider all of the steps involved: preparing and listing; making repairs; finding a buyer; navigating the closing process; and finally moving into your next place.

Here are some of the most common mistakes that occur when selling a home; be informed so you avoid making them.

1. Underestimating the costs of selling

The total cost to sell a home can amount to much more than the 5-6% in agent commissions most people expect to pay. When you account for closing costs, repairs, and other concessions to the buyer, the costs of preparing your home for selling, can be closer to 10% of the sale price. For example, you’ll have to do some staging, cleaning, and painting.

If you move into your new home before selling your old one, you may have to rent a temporary place or pay for both mortgages as well as other carrying costs, such as utilities, HOA dues, taxes, and storage. Learn more about trading-in your home to avoid these costs.

A real estate agent can guide you through this and make recommendations for service providers. Many brokerages now offer concierge programs that pay for these costs upfront and get paid at closing.

2. Setting an unrealistic price

The price you want and what the market will pay can be two very different things. You might hear the terms Fair Market Value, or transparent pricing, which refer to how a home is valued.

home selling mistakes - setting wrong price
From Opendoor

Your agent will provide you comparisons and data based on homes with similar sizes and features that have sold near you. These comparable sales, also referred to as “comps”, are what many real estate agents use to suggest a listing price and what appraisers use to appraise a home. Please note, buyers ultimately decide what they are willing to pay for a home and what it will sell for and if they will remove the appraisal contingency or not.

3. Only considering the highest offer

The highest offer, while exciting, isn’t always the best offer given your needs. It’s common in many traditional sales to have contingencies. These are conditions that must be satisfied for the sale to close. You may have contingencies that protect the buyer’s interests like a financing contingency or an inspection contingency.

Depending on the market, buyers lately have been removing all their contingencies in very competitive markets because they can impact the timeline and sometimes the certainty of the sale.

You’d have to consider how the added timing and uncertainty compares to a slightly lower offer without that contingency. In another scenario, you may have a buyer who is willing to be more flexible on repairs versus another who is offering a higher price but may ask for repair credits.

4. Ignoring major repairs and making costly renovations

A long list of maintenance issues can turn buyers off and potentially decrease the value of your home. More importantly, buyers expect the condition of your home to match the description. Consider prioritizing the most glaring issues, particularly those that are likely to turn up during a home inspection.

most important things to repair when selling a house
From Opendoor

Many sellers also consider making renovations or improvements to increase their home’s value. Be sure to carefully consider any renovations as your goal is to get the most bang for your dollars spent, ultimately selling for more than if you had not done the improvements.

5. Not preparing your home for sale

One of the challenges of listing your home on the market is showing your home to prospective buyers. Generally speaking, the cleaner, less cluttered, and more well-decorated your home is, the more appeal it can have. Moving.com suggests that clutter can make your home appear smaller and make it more difficult for buyers to picture themselves living in your home. In fact, staged homes sell 88% faster and for 20% more than those that aren’t staged, according to Realtor.com.

Don’t forget about curb appeal. As Moving.com puts it, “Your home’s exterior is like the cover of a book, setting the stage for what’s inside.”

6. Choosing the wrong agent or the wrong way to sell

Make sure you select an agent who has your best interests at heart. According to Realtor.com, some agents charge a flat fee, while others charge a percentage of the sales price, usually 5-6 percent. Sellers can negotiate the commission.

To help ensure you’re getting the most bang for your buck, take the time to interview potential real estate agents. Check their licensing and credentials, read their reviews and understand their experience.

7. Showings, especially in a COVID environment

Once you’ve put your home on the market, prospective buyers will want to see it. In COVID times, appointments have to be set. There are no Open Houses and the buyers who are looking are serious about buying. Thus, a virtual tour is the first step in showing off your home.

home selling mistakes - limit showings
From Opendoor

8. Not considering your broader financial situation

Many sellers don’t have a clear picture of their financial situation before selling. This can lead to painful surprises. Before you make the decision to sell, it may be helpful to assess your income, debt, and any upcoming expenses during your move. An agent can also provide an estimated net sheet.

If you’re selling your current home in order to buy a new one, you’ll want to calculate how much you can afford. Getting in touch with a mortgage broger and getting underwritten will eliminate any surpluses and give you a clear picture on what you will be able to afford.

A rollercoaster closing on 2600 Jones Rd.

I recently represented buyers and helped navigate them through a difficult process to land a great home at 2600 Jones Rd. in Walnut Creek. What started as an ordinary home-buying process for John, ended up being a bit of a nightmare as the loan kicked out of underwriting without telling us and loan contingency removal was due on Monday. We got a conference call with them on Saturday and Monday, had a “solutions consultant” calling my client. Nobody mentioned this would happen. We got the details worked out, but when I asked how long before we know if it is approved, he said 6 days and I had no confidence that Quicken would still be able to make it work as their communication and getting all the documentation they needed upfront was not optimal.

We got a notice to perform, I recommended John get approved with JVM, the listing agent had spoke to this lender and they confirmed what I was telling her, so they gave us until Friday. JVM was able to fully approve him, so we removed the last remaining contingency “the loan” and asked for an extension to close. The sellers agreed. John is a newspaper guy from Minnesota and retired from the Chronicle, who was looking for a home where his 11-year-old son and mom, would be in a better school district. The one he would have been going into was ranked a 1. John Jr. will now be going into 6th grade at WCI albeit virtually for now.

John’s son is the joy of his life, a smart kid who now gets to attend a great school in Walnut Creek! We had our own troubles getting a loan and getting everything finalized (especially with the pandemic throwing things off), but eventually, we closed thanks to the help of JVM Lending.

Now, John has got his son into a get a 2-bedroom home in Walnut Creek with a pool. I also gave a bike that I wasn’t using, so now John’s son can walk to school, ride his bike, and swim in his new home. JVM was able to underwrite them quickly during this process, and that allowed us to get everything closed on the deadline day. So many crazy things went on during this process, but I’m happy to say that John landed his son and mother a great home!