Peninsula/South Bay Rent Control Cities and Information

Rent Control

East Palo Alto
For partially exempt rental units, the owner must provide the tenant with a written notice of this Ordinance on a form prescribed by the City at the commencement of any tenancy, can only evict tenant for very limited purposes, and not harass tenants. All non-exempt units for rent in East Palo Alto must abide by all provisions of the rent stabilization ordinance, including the above portions. The ordinance includes restrictions on the maximum allowable rent at two different levels for tenancies commencing on either January 1, 2006 or July 15, 2009, requires annual registration of rental units and certification of maximum allowable rent (includes a fee of $234 per unit for 2011), restricts the allowable increase in the rent amount, and allows for the rent to be reset at the market rate at vacancy.

Los Gatos
Annual increase limited to 5 percent per year or 70 percent of CPI. 10 percent increase is allowed if rent hasn’t been raised for 24 months. Applies to tri-plexes or larger (Per Costa-Hawkins, units built after 1995 are exempt). Vacancy decontrol. Pass-through increases is allowed provided owner justifies increase through specific formula. There is an annual registration fee for rental units that fall under the ordinance.

San Jose
Applies to units built before Sept. 1979, 8 percent annual rent cap, 21 percent if no increase for over 24 months. Vacancy decontrol. Increase on or after anniversary only. Pass-through increases is allowed provided owner justifies increase through specific formula. Registration fee is required for rental units at two rates depending on whether they were built before or after 1979.

Source from Silicon Valley Association of Realtors (SILVAR)
http://www.silvar.org

 

 

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Risky Business

With the buying frenzies in 2013 so far, we heard ever aggressive, bold and daring offers from buyers and buyer agents. The conditions and situations are unprecedented. By throwing out unconditional offers, some predictable damaging consequences followed. Here are some instances:

1. Non Contingencies Offers – It is the trend in multiple offers world. Use this tactics to allure seller and secure the bid and stand out in among other offers.
Although offer being accepted quickly, the appraisal process may be blundered. Due to offerers swarmed in hitting price 15%- 20%, or more, than the asking, the appraised value may not support it. Since buyer does not have the appraisal contingency protection, buyer will have to come up the differences in order to get a loan, or else, buyer may loose the deposit money. Had buyer had the appraisal contingency as  an offer condition, he can reconsider this purchase. But in today’s market, buyers have no time to rethink, because if he does not take as-is in everything, the next person will. It’s just that crazy and practical! (Cash buyer may not have the loan concern, as long as cash buyers put in more cash!).

A regular 3% deposit on a million dollar purchase, it’s $30,000 stake, if buyer did not put down more.

2. By-Pass Inspection – As a responsible buyer, one always performs property inspection as an insurance of the product he buys. But in order to get the house fast, buyer under pressure to forgo this step. He may see everything looks nice and decent from outside but ignore the structural and functional parts of the house. Some may even think  since seller has done house inspection already, therefore,  I will skip this part. No one house has no crack line, one inspection may not say everything of the house. A second opinion will not kill the deal if no major problem is found. Actually, buyers will sleep better had he perform this process. And this will also avoid any “buyer’s remorse” or disputes in the future.

3. Ignore Disclosures – Due to lack of inventories, buyers are too concentrated  in figuring out numbers and  ignore another most important process- exam  the disclosure packages. (I have seen occasions that disclosures are not yet ready but houses gotten sold already!!!). Spending quality time examining the property is the basic procedure in buying your home, in order not to spend that $10,000 in termite fumigation, the eager buyers better check disclosures thoroughly.

4. Bidding Multiple Properties At the Same Time : In order to get the property, buyers  sign numerous contracts at the same time hoping there will be one got accepted. This tactics may add extra pressure on buyers and agents themselves.  Buyers may run the risk of getting two offers accepted and have to make decision in a very short time. Or buyer may encounter counter offers with multiples other contenders but loose the chance and timing in getting a better deal with the other offer. Timing is the essence in contract negotiation. Few minutes attention to key details can either get the deal or lose it.

I will continue more bidding war scenes in my next post.

Lowest Inventory in the Decade of Silicon Valley

inv_sale.2

Please click the chart to enlarge the image. This is a valuable information of the Silicon Valley real estate inventory from 2001  to 2013.
The chart showed the inventory at each January of the year. Usually a healthy real estate market  inventory of 3,000 units and above support the market flow of support and demand  for 6-7 months. In January, 2013, we’ve only had 303 units for the NWQtr, Class 1 and Class 2 combined (see notes below for definition). Which explains why good new listings come to market and got sold right away. And price wars continue.

Also, January 2008, the inventory had its peak of more than 5,649 units in the market,  but at the same time closing was only 476 unit in that month for both Santa Clara County Class 1 and Class 2. (Lowest sale in the decade). That’s because most of the inventories were distressed homes and economy was about to melt down, home buyers were reluctant to buy.

I hope this valuable information will prepare home buyers of  this Spring season. The market in the Valley is very robust and buyers have to be more than ready in order to win.

Note:
Class 1 = Single Family Residence
Class 2 = Townhomes/Condos
SCC = Santa Clara County
NWQtr = NorthWest of Highway 17/011 & SouthWest of Menlo Park/101 = SILICON VALLEY

2010 Year End Market Report

With 2010 coming to an end, I want to wish you a healthy and prosperous 2011. This year again has been a very challenging year in real estate for many owners, buyers and agents. The foreclosures and short sales are a big part of our transactions. Fewer new construction activities broke ground, mostly; the builders are trying to finish their current projects. The employment has improved a little in the Silicon Valley (we are very lucky to be here), but overall the State unemployment is over 12%.

Santa Clara County is following the slow economic growth that exists state/nationwide. The foreclosures and short sales have spread into all area including the very high end. We are seeing short sales and foreclosures are in parts of Los Altos, Palo Alto, Saratoga, Cupertino and Los Gatos affecting 1M+ price tag homes.
Overall the median single family home prices in the Santa Clara County rose to about 8% since October 2009. The increase was more than 12% earlier this year but we lost some grounds due to the end of the first time home buyer’s tax credit that ended April 30, 2010. At this point, I believe that we have lost approximately 15% to 30% in home values from their peak depending on the area and the price range. The most desirable areas under 2M have experienced 15% to 20% drop.

Here are the median single family home prices since March, 2009,  Santa Clara County:
March 2009  $450,000
October 2009  $593,000
October 2010  $641,500
**You can see the effect of Federal and CA State Tax Credit Programs from above numbers.
Comparison of last 12 months ending October 31, Santa Clara County Single Family Stats:                                                                    
                                                                                                    2009                            2010
Total closed sales                                                             11308                            11460
Distressed Sales (Bank Owned
& Short Sales)                                                          5705         50.5%          4115      35.9%
Sales under      $500K                                          5450        48.2%          4217      36.8%
Sales between $550K to $1M                          4349         38.5%        5023      43.8%
Sales between $1M to $1.5M                            1067           9.4%         1524      13.3%
Sales Over $1.5M                                                     590           5.2%            850        7.4%

List of 2010 Improvements as per the above numbers:
1. 28% less distressed homes have sold
2. 23% less homes have sold under 500K
3. 15% more homes have sold between $500K to 1M
4. 43% more homes have sold between $1M to $1.5M
5. 44% more homes have sold over $1.5M

Bottom line, it is very encouraging to see such a high improvement in sales of properties $500K+ and $1M+. Also having a lot less distress home sales and a lot less under $500K home sales indicates that the low end has come up in value pushing more mid to high end sales.

The Interest Rates: “ARE THE LOWEST IN 50 YEARS!!!”. Loan below 417K, 30-yr fixed are around 4.0% to 4.75%. Below 729K are around 5% to 5.5% and the Jumbo loans above 729K are around 5.5% to 6%.  (as of November 25, 2010)
Good News 1: more homes are selling above 500K and $1M
Good News 2: the interest rates have made it possible for more buyers to qualify to purchase homes and to consider higher priced homes.
Good News 3: It is a great time to take advantage of lower priced homes, lower interest rates and flexible sellers who have to sell.
Good News 4: Record numbers of re-finance loan processing. More home owners are taking the advantage to refinance their homes and get the lower interest rates. Many even did 2-3 times in the past 2 years – without paying any fees.

Statewide, the inventory has leveled or is down across the board in all counties. As per CAR, 51% of all home sold, had multiple offers. There are a lot of cash buyers taking advantages of the bargain priced homes in the Central Valley. Short sales and foreclosures are the main activities in those markets.

Summaries: the employment in Silicon Valley is improving at a much better rate than any other areas. High tech is the engine that is powering our employment growth. There is a lot of expansion in companies like Google, Facebook, Cisco and many others. We are seeing more hiring and relocations to our area this year than in the previous 3 years. Another note, the bank did not flood the market with foreclosures, they market their properties in a controlled fashioned in order to obtain the highest value and the the least amount of loss.

There you have it. My 2010 Silicon Valley market assessment. Please do not hesitate to write or call me should you have any questions.

Wishing you and your family a peaceful, safe and happy holiday seasons!

Passive Vs. Active Contingency Removal

 

A contingency is something that a party to the contract holds as a way to get out of the contract. The most common would be inspection, financing and appraisal contingencies for the Buyer. The “standard” method of how contingencies are officially removed has changed quite a bit over the years. There are two main ways- passive and active.

Passive contingency removal means that when the deadline comes and goes and the party in question has not canceled the agreement, by default they have removed their contingency. That is why it is called ” passive.” If you do nothing, you are deemed to have removed your contingency.

Active contingency removal means that when deadline passes, if the party in questions has not removed their contingency, they still retain it. For example, if the contract gives the Buyer 17 days to remove their inspection contingency, and on the 18th days the Buyer has not removed their contingency, the still have that contingency in place. The Seller at that point can give the Buyer a notice to Perform or Quit, but the Seller can’t just declare the Buyer in default of force them to close escrow or try to retain their deposit.

Years ago, the California Association of Realtors (CAR) used the passive method in our contract, but then they lost a couple of lawsuits where the Buyer claimed the passive method didn’t give them enough time if the first inspector recommended more inspections. So now our standard CAR contract does use the active method. However, most bank-owned properties come with and addendum from the bank that converts it back to passive method. So if you are a buyer, you need to ask your agent which method of contingency removal applies. If it’s passive, you need to REALLY watch your deadlines.

Have a question in your contract? Please give me a call or email:
jchen@referralrealty.com

“Information provided by Referral Realty*

New Foreclosure Laws

A rash of new federal and state laws have been proposed to deal with the mounting number of foreclosures. One that did just pass in California is SB 1137 and takes effect immediately, which is rare. This shows the urgency the lawmakers give to this situation.

The  1st part is directed towards homeowners who are behind in their payments. At least 30 days prior to filing a notice of default, the lender must try to contact the borrower by phone “in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure.” The lender must provide the borrower with the contact info to find a HUD-certified housing counseling agency. If the lender is unable to reach them by phone, they can send them a certified letter. There are some exemptions to this, for example if someone has filed bankruptcy, abandoned the home, or if they are taking steps to delay the foreclosure without due cause.

The 2nd part of the law is in regards to tenants. The lender must notify the occupants of the upcoming foreclosure, and the new owner must then give the tenant 60 days notice to vacate after purchasing the property at trustee sale.

The 3rd part requires the new owner to maintain the property after a trustee sale. This includes maintaining the exterior, taking steps to prevent trespassers/squatters, and looking after pools to prevent attracting mosquitoes.

The law does provide for fines of up to $1,000 PER DAY if these items are not handled correctly. So this is something that lenders will be taking seriously.

**Information provided by Referral Realty**
For questions, please contact me directly:

jchen@referralrealty.com

 

 

 

 

How To Make Your Offer Stand Out

Buyers are confused and frustrated right now. They find a home in this “buyer’s market,” only to find out there are 15 offers on the property, and most are more than asking price. So how do you make your offer stand out from all others? The highest offer does usually get it, but not always. Here are some basic guidelines, but keep in mind that each Seller is different, so none of these are guaranteed 100% accurate all the time.

First, for bank-owned and short sale listings, they won’t even consider your offer, no matter what the price, if you have to sell your home first. so don’t even try. They MAY consider a contingency on a close if you are a solid buyer and are close to closing.
Next important would the the “net” price to the Seller. For the most part, distressed Sellers don’t care about what credits/fees you ask for. they run it through a spreadsheet and see how much they are left with, and they will usually (but not always) choose the offer with the highest net to them. So to most Sellers, $200K minus $10K in credits is the same as $190K offer. BUT if you really don’t need the credit, probably better to just write it at $190K so it’s a “cleaner” offer and that also reduces the risk of appraisal problems.
Next would be the amount of your down payment. If two offers are a similar net to the Seller, they will probably choose the one with the most down payment. Buyers with more down are more likely to be approved for their loan, and it can also make the appraisal process easier. If one buyer is 3.5% down and the other is all cash, but the all cash offer is 10K less than the 3.5% down buyer, the Seller, most often may take the all cash as more of a “sure-thing” even though it’s a lower net. And then there are your inspections and closing time periods. Most distressed Sellers want the shorest possible time periods for you to inspect the property and then closing escrow. Usually 7-10 days for inspections and 30-40 days maximum for closing escrow.

**Information above is provided by REFERRAL REALTY, each purchase case is different, there’s no guarantee norm.

 

If you have any questions on the bidding process in today’s market, please give me a call.
Jin Chen
1601 S De Anza Blvd, #150
Cupertino, CA 95014
650.207.1421 (direct)
408.996.8100 x 316 (v)
408.253.0983 (f)
Website: http://www.realtorjin.com
And  check this BLOG frequently as I have market newest information from time to time.