A recent example is 2401 Burnside rd which was priced at $925K originally. If it had been priced at $825K originally it would have brought that amount, maybe a little more. The price has been dropped several times and will be reduced to $799K tonight. The cost to the seller is not just the $25K gross, it’s the carrying cost for several months, the delay in moving forward with their plans, and stress. It’s a nice 3,000 Sq Ft home on 1.8 peaceful acres with good views…nice open floor plan. Not perfect but a good house in a nice location.

I can think of a lot of ways to spend $25K….A month fly fishing in Argentina sounds real good.

The post What’s the cost of overpricing your home? appeared first on Bay Area Real Estate Trends.

So, what does this mean in Sonoma County?

Not much, and a lot.

In Sebastopol if the under $500K inventory doubled it would put 5 more homes on the market and IF they were priced right they would sell immediately. There simply are not enough homes here to satisfy the demand for buyers who can afford to pay up to $750K and due to the restrictions on building it’s unlikely there will ever be enough. Prices are likely to moderate and may drop a little but a significant price drop is unlikely in the near future.

Looking for an old farmhouse on 1-5 acres? Same deal, there aren’t many in existence, they will always bring a premium, which is not to say prices won’t moderate a bit in the near future ( 3-4 months).

If you are looking for a reasonably standard home along the 101 corridor in the sub $500K range it means a lot. That’s where the majority of homes are and thus the majority of homes for sale, and the inventory increase will have the greatest affect in those areas.

Right now prices in the $700K plus  price tiers are all over the map, with some very nice buys. Contrast MLS # 21302738 which is located at 2920 Thorn Rd in Sebastopol with MLS # 21305636 which is located at 358 Bohemian Hwy in Freestone.

Interesting times….

The post I’m calling the bottom in Inventory appeared first on Bay Area Real Estate Trends.

MLS # 21313308 is located at 7149 Calder ave. This is a 2236 Sq Ft 1895 built 4 Br 2 Ba home on the Sonoma County Historical register. The lot is .2 acres and the price is $639K. This one is a beauty in a great location and I expect it to sell quickly for more than the asking price. If you like old homes it would be hard to do better in town.

MLS # 21313149 is located at 9050 Green Valley Rd in Graton. This is a 1946 built ( And updated) 3 Br 3 Ba 1740 Sq Ft home on .58 acres with an in ground pool. It’s in decent shape at a nice location and the $419K price is a good one.

MLS # 21311386 is located at 471 Pleasant Hill ave N. It’s a decent little place and the price dropped to $449K, It needs landscaping and will probably go for slightly less than the asking price (Not much less, a little) 3 Br 2 Ba 1548 Sq Ft on a.1683 acre lot.

MLS #21311927 is located at 11500 Graton Rd. It’s a 1974 built estate home on 5 acres with great light and nice grounds. 2247 Sq Ft, 3 Br 4 full and 2 half baths. It’s priced at $2.15 MM. There’s a lot of inventory in this price tier, be sure to look at 820 Anderson ( By appointment only) if you are looking for something like this.

MLS # 21308481 has been relisted with a new agent at the same price. The address is 7981 Mitchell Ct, I like the house and the location, but the problem was not the previous agent, it was the price of $799K. I like it at $725K. If you need 3,000 plus Sq Ft and a close in location it’s worth a hard look.

MLS # 21312622 is located at 8143 Valley View Off Ragle Rd S, It’s priced at $525K and while it is a decent home on a nice lot it won’t bring that price in that neighborhood, it isn’t walkable and it isn’t country. 3 Br 2 Ba 1754 Sq Ft on .41 acres built in 1974. 10% too high?

MLS # 21312622 is located at 4959 Blank Rd, It’s listed as .8 acre but is actually more, about .9 acres is inaccessible. And it’s a weird, long and narrow lot. The house is nice and according to the listing agent a neighbor has expressed interest in buying that roughly .9 acres. 3 Br 2.5 Ba 2258 Sq Ft and built in 1999. Priced at $659K (?).

There are a couple of more open, they are the usual suspects…Have a cup of coffee at Hardcore or some pastry at the Patisserie Angelica instead.

The post Open homes in or near Sebastopol 6/16/2013 appeared first on Bay Area Real Estate Trends.

MLS # 21209759 is located at 9499 Mil Station Rd and it has been on the market a LONG time. It’s a fine property, 81.27 acres, a 10 acre lake (WATER!) 13 acres of biodynamically grown pinot and room for enough more to be commercially viable…and an 8207 Sq Ft 4 Br 7 BA home originally built in 1991. That home would run $300 Per Sq Ft to duplicate taking the current condition into consideration. The price has dropped to $3.79MM asked from $4.99MM and there may be a little room in that price. Taking the location,the quality, the soils and the water, that’s a buy. Of the 21 homes priced above $1MM in this area it’s one of the best buys. Another example of why it is important to price your home or estate correctly at the beginning, exclusive of carrying costs mispricing cost these sellers $400K or so. Ouch.

The post Nice stuff on the high end near Sebastopol appeared first on Bay Area Real Estate Trends.

A friend called and said he had the use of a condo in Kirkwood and that the streams were running high and clear. Catch and release fly fishing of small mountain streams is a wonderful pastime and the brookies were hitting.

The post The Broker’s meeting, June 12th 2013 appeared first on Bay Area Real Estate Trends.

Here’s what it looks like today, broken down by price tiers.There are 743 active listings of Single Family homes and ” Farms and Ranches”.

The cheapest active listing for an SFR is $249K, there are 251 homes listed between $249K and $499K and 56 of them have been on the market 60 days or more. That’s where the majority of homes are, and the majority of buyers.

Between $500k and $750K there are 156 active listings and 56 of those have been on the market 60 days or more ( Not a typo).

Between $751K and $999K there are 111 active listings and 49 have been on the market 60 days or more. Signs of price resistance? Almost half of those listings are thoroughly stale.

Between $1MM and $1.5MM there are 72 active listings, 24 have been on the market 90 days or more.

In the $1.5MM to $2MM range there are 39 active listings and 19 have been on the market at least 90 days.

Above $2MM we’re talking upper class. In the $2MM to $5MM price tier there are 94 (!) active listings of which 37 have been on the market 120 days or more.

And in the above $5MM price tier, where homes are toys…there are 18 listings, 5 of these have been on  the market at least 120 days.

Most people buy high and sell low, that’s human nature. And that’s what these numbers tell me is happening.

Low rates and limited supply on the low end have driven prices up, exacerbated by “Investors” chasing yield. Inventory is cyclical and right now it is a great time to sell on the low end. It’s not a good time to buy on the low end. That picture starts to change a little when the qualified buyers start to thin out above $500K, and it’s definitely a good time to buy a place priced above $1MM because there’s an abundance of supply and not much demand.

Pay attention to the quality of the demand for lower priced homes and ask yourself how quickly it can diminish and what could cause that.

The post A look at the Sonoma County Market, June 9th 2013 appeared first on Bay Area Real Estate Trends.

MLS # 21309967 is located at 4880 Vine Hill Rd on 6.38 acres and it is priced at $1.15MM. 3 Br 3Ba, 2643 Sq FT, it’s a nicely updated ranch with a big garage and a pool. It’s a nice house on good land and the location is fine. Based on nearby recent sales the price is a bit high.

MLS # 21312712 is located at 5091 Hutchinson Ave (Off Hessel Rd) It’s a 1420 Sq Ft 3 Br 1 Ba home on .6374 acre priced at $459K. It last sold on 1/27/2004 for $399K and from the pictures it looks like quite a bit of work has  been done since the last sale. It hasn’t been on the Broker’s tour and sunday is the first open house, I have not seen it

MLS # 21312613 is located at 5090 Gravenstein Hwy S. It’s a 1302 Sq Ft 3 Br 1.5 Ba home on 7.35 acres. The house is small, but nicely fixed up. It’s also very close to Hwy 116, LOTS of road noise and a dairy across the street perfumes the air. Too large to garden, too small to farm. There’s also a road and utilities easement that runs along the driveway to two parcels behind this one. $550K, I’d pass on this one.

MLS # 21304656 is located at 2655 Bohemian Hwy in Occidental. It’s a flip, now priced at $599K, reduced from $675K. 1638 Sq Ft 3 Br 2 Ba on 3 acres. The flippers did a nice landscape job and otherwise cleaned things up and it’s much more attractive from the inside than it is from the curb. That said it’s still slightly too high a price, mostly because it’s stale. I like the creek flowing through the property and it has a very nice feel. If you want a peaceful weekend retreat take a look and make an offer. Flippers don’t always make a dollar, they won’t here.

MLS #  21303636 is located at 16785 Lauri Lane in Occidental, off Joy Rd. It’s the classic “Cabin in the redwoods”  on 1.64 acres. 3 Br 3 Ba, separate two car garage with a bedroom over. 2200 Sq Ft, it’s a nice place. Priced at $749K it has been on the market 102 days with no price reductions. After this long sellers are frequently waking up to the reality that a home is worth what a buyer is willing to pay for it. It’s nice, if it suits you an offer only ties you up for 72 hours…

MLS # 21310557 is located at 8105 Hansen on a cul de sac off a quiet street near Ragle Park and close to a middle school and shopping. It does back up to the LDS church, a drawback for some. 1980 built and very well updated with an excellent kitchen and above average landscaping. 4 Br 3 Ba, 2575 Sq Ft with a 2 Car garage on .27 acres. I saw this on the tour and talked to several experienced agents about the price, I have never seen such a wide divergence on the price of an in town home before. Price opinions differed by more than $100K! Buyers answered that question, it’s been on the market 25 days at $749K in a market where appropriately priced homes are in escrow as soon as the offers are reviewed.

MLS # 21304157 is located at 3126 Pauline Dr in Graton and the price just dropped to $795K from $799K, it was previously $850K. It’s a 4 BR 2.5 Ba 2593 Sq Ft home built in 1983 on 6.76 acres. It has not been on the Broker’s tour and I believe this is the first open house despite the MLS showing it as being on the market 91 days. It’s a nice area and the pictures look good, but I have not seen it and don’t recall seeing it on the MLS, which is odd…

MLS # 21311854 is located at 3435 Pharoahs Lane. This is a 3500 Sq Ft 4 Br 4 Ba home on 3.35 acres that has been added to and updated somewhat. The views are very good, the land more usable than is usual for a hillside property in this area and the new master bedroom is well done with an appropriate amount of closet space and a good bathroom. The fences are worn and the steps to the front door are as well. The tiled deck should be inspected carefully, I have yet to see a tiled deck with grout that hasn’t leaked within a year or two. This is a good home in a very nice location, give me a credit for any section one pest or dryrot and I’m OK with the $929K price.

MLS # 21310212 is located at 7888 Joyce lane. It’s a 4 Br 2 Ba 2615  Sq Ft home on 1.34 acres with an in ground pool and decent landscaping around the house. It was built in 1969 and has been updated. I did not particularly care for the floor plan, poor flow. And buyers clearly think the asking price of $850K is not appropriate because it’s still on the market after 28 days.

MLS # 21307522 is located at 2401 Burnside Rd and the price has dropped to $875K, which is getting close. It’s a 3064 Sq Ft home on 1.81 acres with 4 Br and 2.5 Ba at the end of a private lane. Good views, but not as good as Pharoahs Lane. I liked the open floor plan and the light. It has a nice feel, and there’s room for a garden. At $825K I’d call it a buy and it’s been on the market long enough that an offer at that price might be accepted.

MLS # 21311024 is located at 2947 Burnside Rd. This is a home I liked. Nicely updated, but no real landscaping. Like Pharoahs Lane when it comes to the view, but in better condition with a better floor plan.3 Br 2 Ba 2615 Sq Ft with “Bonus Rooms” beneath ( One of which appears to have been used to grow medicinal herbs in the past). It’s in good shape with lots of decking to take advantage of the views. Priced at $929K which is about right, this is well worth a look.

If any readers see these homes I’d appreciate your comments, especially if you disagree or believe I did not mention something important about them.

The post Open homes in or near Sebastopol June 9th appeared first on Bay Area Real Estate Trends.

Properties that cash flow at 4% given current rents and prices often do not at 5%.Small investors who can do simple math will be willing to pay less. Julie Kay of Commerce Mortgage spoke at our office meeting today and said than an ideal borrower for a non owner occupied  home saw their rate rise from 4% to 4.5% between monday and wednsday.

And homes priced at or below the conforming limit are also affected to a greater degree than those priced above the conforming limit ( Buyers of high end homes get a larger benefit from the Mortgage Interest deduction and generally have more assets and higher incomes). The psychological effects of the headlines on people who have been watching their homes gain value while waiting to sell will be more general than perhaps it should be. Areas where “Investors” large and small have been snapping up homes as rentals and areas with a lot of FHA and first time buyers will see a larger effect.

Here in Sonoma County I know of quite a few people who bought at or near the peak with variable rate loans, many are now above water for the first time in years and they have been waiting for prices to rise before they sell, many are stretched to the limit making their current payments at very low interest rates, any bump up in Treasuries or the Libor and they will be SOL.

Sonoma County had the second highest use of “Creative Financing” of any County in the USA, many of those creatively financed homes have been foreclosed on or short sold, but quite a few have not.

Inventory in the lower price tiers is especially low in nicer parts of Sonoma County, there are 3.5 homes priced above $1.5MM for every one priced at or below $500K in Sebastopol (14 and 4). That will change, Inventory is cyclical and we appear to be at an inflection point.

It seems likely that inventory on the low end will pick up substantially here at the same time that buyers in that range find themselves able to pay less. I think it’s a good time for low end buyers to sit back for a month or two (OW, my wallet) and a very good time for anyone thinking of selling a home priced below the conforming limit to put it on the market. There’s a window of a month or three for sellers before these rises in mortgage rates seep through the market and start affecting prices. Don’t forget that ANY profit is a good profit.

The post The probable effect of rising mortgage rates on home prices appeared first on Bay Area Real Estate Trends.

 Lending Lingo Explained

Annual Percentage Rate (APR): is a function of blending the closing costs associated with the loan transaction and re-amortizing that figure over the term of the loan. On traditional loan financing, the APR is usually  within .125%  of the actual note rate tied to the loan amount sought.

What to know: APR is a comparative tool enforced by the Truth In Lending (TILA) to quickly assess cost differences between loan choices. The APR has no affect on what your principal and interest payment will be nor the note rate. APR represents a barometer of loan costs only.

No Cost Mortgage: often dubbed a “no-fees” mortgage is truly a “no cost” loan, no appraisal fee, no lender fees and no closing costs. These fees are in fact assessed by virtue of taking out the mortgage. The mortgage lender provides a credit at the close of escrow equal to the amount of the closing costs, thereby creating a “no fees” loan. Since this is the case, the APR would be equal to the interest rate. Mortgage lender will have to disclose the actual APR as though you were not getting the credit for closing costs because all figures have to be disclosed.

What To Know: No-cost mortgages will contain a higher interest rate and subsequent APR (due to the way lenders have to disclose), so you’re in essence, amortizing the closing costs over the life of the loan e.g. 360 months representing a 30 year fixed rate mortgage. The higher interest rate allows the lender to generate “overage” for the benefit of the consumer taking out the no-fees mortgage.

Low-Cost Mortgage: is a traditional mortgage all mortgage lenders offer that is considered standard, taking out home loan paying any applicable fees associated with doing so, excluding discount points. Included is a combination of the closing costs paid in accordance with financing and interest paid over time.

(Note in some cases pain discount points very well make sense, but for our purposes a low-cost mortgage is under the assumption of paying no discount points)

What To Know: low cost mortgages will contain lower rates than their no-cost mortgage counterparts. Because the lender does not have to inflate the rate for generating overage to pay the borrowers closing costs, the lender can reward the borrower by giving them premium pricing when it comes to the interest rate and terms.

Best Bang For The Buck No-Cost Mortgages Or Low-Cost Mortgages

Depends on how long you plan to hold the loan for and and financial goals. For example because the future for many is unknown in terms of how long the loan will be held for and/or how long the property will be held for, a low-cost mortgage is a strategy more conducive to the longer term as the realized benefits of the lower cost mortgage materialize over time. Conversely, if the property hold time or the loan payoff is going to be dramatically shorter such as within the next year, a no-cost mortgage may be more suitable.

Following is a typical no-cost versus low-cost mortgage scenario to see how the numbers change over time…

Assumptions based on primary residence, with excellent 
credit and 65% loan to value.
No-cost mortgage rate 4.125%/APR 4.26%
Low-cost mortgage rate 3.625%/3.76% APR

Based on the figures, after backing out the $2500 in closing costs, the low cost mortgage is $28,387 lower in mortgage interest over the life of 360 months. Looking at the monthly figures, $78.85 per month is the monthly interest benefit attainable on the low cost loans. Add the monthly payment savings benefit with the monthly interest savings benefit to compute total benefit for the lowest cost loan.

Steps to accurately compare figures between the two financing types

1. Subtract the total interest the low-cost mortgage from the no-cost mortgage.
2. Take this figure and divide it by the term of the loan for example 360 months (30 year fixed-rate mortgage) and then subtract the one-time closing costs from this figure (title fees, loan origination fee, recording fees etc.)
3. If you do this correctly it will give you a monthly figure representing the monthly interest savings between the two loans.
4. Next add in the payment savings generated by the lower interest rate and you’ll have the total monthly loan benefit of a low cost mortgage

*Mortgage Tip: don’t be fooled by a no-cost mortgage because there’s no such thing as a free lunch and no matter how good the advertisement is, you’ll pay the closing costs over the life of 360 months. A low cost mortgage will always net a better interest rate and subsequent lower payment.

The post How To Chose Between A No Cost Mortgage Or Paying Fees appeared first on Bay Area Real Estate Trends.

…I’ll pick up a lock set tomorrow with an extra set of keys for the two of you, will that work? Another long pause. “I guess so, but it will really feel strange to lock our doors after all these years, are you sure it’s necessary?”  It’s prudent, a lot of people will be coming by to look at your home and we don’t want them casually mentioning that your home isn’t locked at a coffee shop or somewhere someone NOT RIGHT might overhear. “I guess you are right, but it’s sad”.

Most people who live within the city limits of Sebastopol do have keys to their homes and do lock their doors, but some don’t. And when you get outside of town a surprising number of people never lock their doors and many don’t have keys to their own homes.

Crime rates, especially burglary rates are really that low here in Sebastopol, it’s nice.

The post A conversation most agents never have appeared first on Bay Area Real Estate Trends.