Chinese and New York Stocks Tumble; Whither Palo Alto Real Estate Prices?

February 27, 2007

The big financial news today is the sell-off on Wall Street, sparked apparently by an even larger plunge on the Chinese stock market (New York Times article; link won’t work forever.)

New York real estate blogger Douglas Heddings over at True Gotham believes it will have a positive effect on the New York real estate market.

What about here in the Bay Area, specifically the famous and pricey town of Palo Alto: What effect will the Chinese sell-off have on Palo Alto real estate prices?
Beyond the obvious fact that the Chinese economy is completely intertwined with the American one, there’s an even more important, and local, aspect to the question: Chinese buyers are a significant portion of the local real estate market — 25% or more – and that market has been booming of late, to the continued astonishment — perhaps even chagrin — of the perma-bears. Consider the following chart of Palo Alto’s 7-day rolling median prices. (Data courtesy of the good folks at Altos Research.)

Palo Alto Median Home Prices

Not by any means being an expert on the Chinese stock market, or, for that matter, on Chinese housing spending patterns, I’ll hedge my bets by using the old economists ‘ two-handed prediction trick:

On the one hand…If this drop continues, wealthy Chinese may find themselves with less income to buy properties here in Palo Alto, drying up some of the demand.
On the other hand…If this drop continues, wealthy Chinese may want to get their money out of China in a hurry, and perhaps some of that money will find its way here.

Having pinged some friends with far more insight into this than I, the going consensus so far is that it’s unlikely to have a negative effect, but for different reasons than above:

  • The smart Chinese money is already well-diversified out of the country
  • Not much of the downpayment that Chinese buyers use to buy homes in Palo Alto actually comes from their wealth in China

Any other thoughts?

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Online Amber Alert

February 27, 2007

Alerted by John Harper, I wanted to get the word out about a recently-gone-missing teenager.

Quoting John:

Tonya has been missing since last Sunday, February 18. Tonya is sixteen, a junior at Monte Vista and was last seen getting on Bart in Walnut Creek, destination Berkley. Any info call Contra Costa Sheriff’s Office (925) 646-2441

Missing Teenager Antonina


Yikes! Get these sellers a stager!

February 20, 2007

More and more home sellers and Realtors are recognizing the necessity of investing in home staging before placing a property on the market – but apparently not everyone has been clued in! Sometimes people balk at the thought of putting money towards staging, but these pictures of actual properties for sale across the nation prove that it’s an investment well worth making!


  • Hmmm… living room or Elks Lodge? The way this room is presented makes you look for the banquet tables!


  • Less is not always more. These sellers would be better off having nothing in the room.


  • Outdoor spaces need stagers, too! This patio needs staging to show what a great entertaining spot this is.


  • I could write an entire blog about this one (maybe I will!)! Dirty laundry? Child? Seriously, folks, never put children or family members in listing photos.


  • Your refrigerator magnets and knickknacks are fine conversation starters while you’re living in your house – but a stager would have told these sellers to lose them for selling. You want potential buyers talking about the house, not your stuff!

And last, but certainly not least…


  • Unless this is a toy store for sale, this room is the perfect example of why sellers need professional stagers. I wouldn’t be surprised to see price tags on the bears!

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Introducing Another New Contributor — Ann O’Connell

February 20, 2007

ann_oconnell.jpgI’m pleased to announce that another real estate blogger is joining the crew. Her name is Ann O’Connell and, like me, she is a corporate refugee, having tired of life as a lawyer. Unlike me, she has fabulous taste in and a love for home decorating, and decided to pursue the life of a stager.

Please join me in welcoming Ann O’Connell!


Glenn Kelman and Russell Shaw: Flip Sides of the Same Coin? (AKA The Genius and the Tension in Redfin’s Business Model)

February 18, 2007

Glenn Kelman (Redfin) and Russell Shaw -- Flip Sides of the Same Coin?Apart from both being in the real estate business, what could these two polar opposites — Glenn Kelman, Redfin CEO and industry maverick, and Russell Shaw, mega-producing Phoenix Realtor — have in common? On the surface — nothing, especially when you consider that Russell has been in the business for more years (29, I believe) than Glenn has months (about 13).

Here’s one thing they do have in common: they both aim to move a lot (and I mean a lot!) of real estate. Russell and his team currently sell about 400 homes per year but they’re aiming for 2000. The number of transactions Redfin has had is not public, but however many it is, they certainly also have ambitious expansion plans, including a future foray into Chicago, Boston, and D.C.

How do you do this many transactions? How do you scale any business, for that matter? It’s simple (but not easy): you find ways to outsource and you find ways to become more efficient. And here’s the other thing they have in common: they’ve both found ways to do these things…Russell primarily on the listing side, and Glenn primarily on the buying side.

Russell has apparently built his business the traditional way most large-scale brokers have, by leveraging the natural advantages of the listing agent in this business. You get a listing, put up a yard sign, toss it in the MLS, throw a couple ads in the paper, do an open house or two (or, more likely, get some other agent to cover for you)…and then have dozens of other area agents (your competitors) show the property to their clients and (hopefully) find a buyer for you. Sweet deal. Because of the way the real estate industry is structured, one listing agent can handle perhaps 10 or 12 listings at a time, and if you hire an excellent assistant that number can easily double.

You outsource much of the work to get a home sold to your competitors (for which you compensate them through the “co-broke”) and you increase efficiency by specializing within your team. Russell, for instance, appears to have 12 people on his team. Two of them are “listing specialists” — which I presume means their job is to go on as many listing presentations as humanly possible. They’re really good at it, and every listing they get, they probably hand it over to the “seller consultant” and “listings manager.”

Russell’s team also has three “buyer specialists.” Their job is (duh!) to service the buyers. But here’s the rub: achieving scale on the buy side is much more difficult. A really good full-time buyer’s agent, whose job is nothing but previewing homes and then showing them to the buyers, can perhaps handle 4-5 concurrent clients — and that’s a stretch.

Enter Glenn Kelman and Redfin. If listers can outsource a good portion of work to other agents, why can’t buyer agents also outsource? They can, and Redfin does — to its clients and to its competitors. The buyers themselves do much of the work that a traditional buyers’ agent would do — namely, keeping up with the MLS and viewing homes at open houses, in exchange for which they get compensated by getting a piece of the commission. The sellers’ agents, on the other hand are enlisted (often against their will) to show the properties when there isn’t an open house, in exchange for which their compensation is…absolutely nothing (except avoiding appearing on the “hall of shame.”) Now the buyers’ agent’s job is mostly at the back-end — consummating the transaction — and, voila! now you can scale the business. A Redfin buyers’ agent can probably handle as many concurrent clients as a smoothly running listing agent can: around 10 or 12.

Therein lies both the genius and the tension in Redfin’s business model. The genius is in recognizing that the Internet makes it possible for buyers to do a chunk of the work themselves, but the tension comes about when Redfin — without any compensation — outsources another chunk of work to its competitors.

The other problem is whether Redfin will ever achieve enough profitability to cover the costs of its smart programmers. We’d need more numbers to figure out exactly how many transactions Redfin will have to do in order to go cash-flow positive, but whatever that number is, it’s got to be pretty big.

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Today’s Palo Alto and Menlo Park Properties: A Guard Tower to Ward off Marauding Athertonians

February 16, 2007

What better way to spend a balmy, sunny, spring day than viewing the new crop of homesInventory of homes for sale in Palo Alto, CA to hit the market in Palo Alto? Come along for the ride as we explore the inventory, which, per our friends at Altos Research, is still tight, but improving.

First up was a stray Menlo Park property — “stray” because Menlo Park properties are normally on broker tour on Tuesdays, not Fridays — namely, 1026 Menlo Oaks in the Menlo Oaks/Flood Park neighborhood of Menlo Park. A retired fireman’s residence, this classic old 3/2 home sits on a 9000 sq ft lot, a size more commonly found south of Bay Road than north of it. The listing agent, Jeanne Wangsness of Coldwell Banker, has it listed at $1,047,000, and in this market it’s anybody’s guess what the winning bid will be, despite how close it is to the charming sounds of highway 101. Look at it this way: you’re paying $100,000 for the home, another $2000 for the quaint (but gas-burning) stove, and $945000 for the land.

1026 Menlo Oaks, Menlo Park, CA 940251026 Menlo Oaks, Menlo Park, CA 940251026 Menlo Oaks, Menlo Park, CA 94025

From there it was on to Palo Alto and 2297 St. Francis, listed by local Coldwell Banker superstar Brendan Leary. Tragically close to highway 101 and Embarcadero — and priced accordingly at $925,000 — is a definite candidate for the cute award, with 2 bedrooms, 2 bathrooms and 1120 square feet. Detracting from its charm, however, is a somewhat unkempt back yard.

2295 St Francis Drive Palo Alto CA 943032295 St Francis Drive Palo Alto CA 94303

After popping by Intero Real Estate’s Lana Raltson’s listing at 290 Iris Way in Palo Alto, I mosied on over to see fellow Alain Pinel-er Arti Miglani’s listing at 3055 Stelling. Showing my softer side, I took time to coo over an adorable little 8-month baby whose mother was busy looking over the property. Listed at just under $1.2M, this 3/2 Eichler home has been well-looked after and nicely remodelled, maintaining some of the original charm. Typical of this style home, there is a partial wall separating the kitchen from the living area, but the kitchen has been redone with tasteful tiles, cabinetry, and appliances, and is well lit from both the large windows and door leading outside and the track lighting. Arti had thoughtfully provided a coffee cart service — a wonderful way to keep Realtors lingering longer at the property.

3055 Stelling Palo Alto 943033055 Stelling Palo Alto 943033055 Stelling Palo Alto 943033055 Stelling Palo Alto 94303

Then it was two quick stops at 3934 Nelson (Pat Miller, Alain Pinel) and 2590 Bryant (Tim Anderson, also Alain Pinel) — the latter a small home on a big yard, whose nearly-certain fate is to be torn down and built into a McMansion like the one currently being built 2 houses down.

Today’s pièce de résistance was definitely the last property I saw: 345 Lincoln Ave, a grand century-old Professorville home listed by the Carol/Rosemary/Nicole team (again — Alain Pinel!) For just under $5M, you get a 21000 sq ft lot (pretty rare in Palo Alto), an elegant 4000+ sq ft home, 6 (or more) bedrooms, two stories plus an attic — and thought I can’t speak for the listing agents, they would probably be happy to throw in a GPS so you can find your way around. The nicest touch of this property was undoubtedly the “guard tower” perched above the back of the house, extending up to a four-story house, surrounded by a wall of glass. A perfect place for a sundowner or a late afternoon nap, one imagines this tower would have been perfect for spying on those marauding Athertonians in the old days before peace broke out between the two neighboring towns.

345 Lincoln Ave, Palo Alto, CA 94301

Curious about the route I took? I didn’t think so…but here it is anyways.


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Written by Kevin · Filed Under Alain Pinel Realtors, Brendan Leary, Coldwell Banker, Flood Park, Intero Real Estate, Menlo Oaks, Menlo Park, Palo Alto, Professorville, Property reviews, Real estate | Leave a Comment 

Shopping for Houses Isn’t Like Shopping at Nordstrom’s

February 13, 2007

nordstrom.jpgStanding at my open house the other day, I decided to make a study of how buyers shop for their dream homes. To each person or couple entering the condo open house I was hosting, I said, “Are you looking to buy a house today?” Some laughed, grabbed the flyer I was holding and marched past me; others giggled, replied yes and with those, I held conversations; and then there were those who said, “We’re just looking!” hoping their reply would be enough to make me go away. But standing in front of the door I had no where to go.

So I asked, “Do you have an agent?”

“No! We don’t need an agent yet.”

“Well okay, then tell me what are you looking for? Maybe I can help you find it.”

“We’ll know when we see it.”

“Well build me your dream home.”

“Really, we’re just looking. Would you mind if we just had a look?”

Receiving similar replies such as these from “lookers,” it finally dawned on me that either buyers have become so jaded by the agents jumping on them at open houses or they think that going to an open house is just like shopping for clothes at a department store.

When I go shopping, I don’t like to be bothered, unless of course I can’t find anything or want to make my purchase NOW! I race through shopping malls swatting sales people away until I really need them. And I get the feeling that that’s what most buyers are doing when they go to open houses. They drop by each property hoping they won’t have to talk to an agent. But what, I wonder do buyers do when they find their dream house? Ask the listing agent holding the open house to double end the deal? Ask the agent holding the open house for the listing agent to represent their offer? Would you go to just any doctor and ask him to do surgery on your heart? I encourage you as a buyer to consider that maybe at the moment you find your dream house, that that isn’t the best time to need an agent.

Here’s the deal – shopping for houses or condos isn’t like shopping at Nordies! Buying property is – as we all know – a really big deal. There’s big bucks – especially here in Silicon Valley – at stake. When people buy houses, they get emotional; their transactions require facilitation; and it requires an expert – someone you are comfortable with and trust – to make sense out of the mounds of paper work necessary to negotiate and close a deal.

Are you one of “those” buyers who are waiting to find the perfect agent at just the right moment? You’re just out there on Saturdays and Sundays looking at property – without an agent – and thinking you’ll find the agent when you find the property! If so… reboot your search. In the market we’re in here on the Peninsula between San Francisco and San Jose or anywhere for that matter, you want an agent working for you from day one. When you find that property, you may only have two – three days to receive disclosure documents, review and understand them, as well as be prepared to get in the ballgame of multiple offers. So instead of swatting agents away at the door of their open houses, start interviewing them next Saturday and Sunday. Use the web they are trying to catch you in as an opportunity to interview them. You don’t have to keep them. But get a sense for how they will serve and work with you if they were your agent. How can they make your search easier? Ask them about the real estate company they work for? What do they know about the market in which they work? What your goal is, is to find an agent who is going to go to bat for you; someone who has YOUR best interests at heart; someone who is going to be in your real estate life for life. Your agent needs to be a negotiator; familiar with contracts; and most of all they need to understand your wants and needs because as your agent it’s all about you and getting you what you want at the best possible price.

So the next time you’re at an open house, interview the agent guarding the door and find out if that agent is right for you. That way when you find your dream house, you’ll be poised and ready to make an offer that gets you exactly what you want.

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Written by Ana Hays, Realtor, Alain Pinel Realtors · Filed Under Choosing an agent, For buyers, Open houses, Real estate | 9 Comments 

Introducing Another New Contributor — Ana Hays

February 13, 2007

ahays.jpgI made a comment in an office meeting the other day about blogging, and everybody’s eyes glazed over as they laughed, “There goes Kevin again…”  All, that is, but Ana Hays, who approached me with the eagerness of somebody who, I assumed, had a passion for real estate, a penchant for writing, but no way of marrying the two together.

Turns out I was right.  Ana is a long time Bay Area resident and discovered her inner writer during a sojourn in Hawaii.  We had lunch and hit it off right from the start, kindred spirits in many ways.  She has a ton of great ideas about real estate content and just needed a platform, which I was happy to provide.

Ana, take it away!


Written by Kevin · Filed Under Real estate | Leave a Comment 

Today’s Palo Alto Real Estate Gems

February 9, 2007

Undeterred by the light rain — and well-protected by bright yellow rain gear — I ventured out to sample a pick of today’s properties.
First up was a listing from the local real estate triumvirate of Carol, Rosemary, and Nicole of Alain Pinel at 1428 Hamilton Ave.  The home’s ranch-style exterior gives an undeserved first impression of blandness, an impression completely undone once you see the inside.  The living room, presumably an addition, uses skylights, light paint, recessed lighting, and the natural sunlight coming in from the French doors to give a large, warm, welcome feel.  A little office cottage in the back went unvisited, alas — I had left my shoes at the front door — but I did take the time to check out the basement, an unusual enough feature of Bay Area homes that they always warrant a visit.

1428 Hamilton, Palo Alto1428 Hamilton, Palo Alto1428 Hamilton, Palo Alto

Bob and Lori Ann Wolff of Coldwell Banker’s entree at 1295 Wilson, also in Palo Alto, is one of those classic “they just don’t build ‘em like that any more” Victorians with a 112-year old history.  The inside is as true to form as the outside, with wooden staircases, a charming attic, storage nooks, a jack-and-jill bathroom.  The original owner took a picture of the home in all its Palo Alto farmland glory which has remained with each subsequent owner, and will pass on to the next lucky owner as well.


After seeing a few other properties, my last one was a contemporary listing in downtown Palo Alto by Alan Dunckel (Alain Pinel Realtors).  Situated at 334 Hawthorne and designed by local architect David Solnick it is sleek and well-lit, with all the creature comforts of a contemporary:  recessed lighting, open plan granite-counter kitchen, and snazzy bathroom fixtures.  If you’d like a look, drop by this afternoon (Feb 9, 2007) from 5pm to 7pm for Alan’s cheese and wine soiree.

334 Hawthorne Palo Alto CA334 Hawthorne Palo Alto CA

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Written by Kevin · Filed Under Alain Pinel Realtors, Alan Dunckel, Coldwell Banker, David Solnick, Palo Alto, Property reviews, Real estate | 4 Comments 

The Ultimate Remedy Against Unlicensed Contractors

February 9, 2007

Unlicensed contractors have the riskiest of occupations. That is, they risk the legal ability to collect compensation for work they perform, and more importantly, they risk the ability to keep the money they have been paid. Why is this you say? Well the California legislature has made a point to prevent unlicensed individuals from doing business in this state by not offering them any judicial help to recover compensation even if the consumers strategically were lying in wait to prey on the unlicensed individuals. California Business & Professions Code Section 7031(a) prevents an unlicensed contractor from collecting on debts owed to them by consumers under contracts due to their unlicensed status. Similarly, B&P Sec. 7031(b) gives consumers who have contracted with unlicensed contractors the ability to sue for restitution or reimbursement of all monies paid to the unlicensed contractor for ‘any act or contract.’ This harsh and draconian rule applies even if the unlicensed individual has perfectly built you the Taj Mahal.

The California Supreme Court has a long history of consistently supporting the legislative determination that unlicensed contractors ‘work for free in this state.’ California courts have consistently held that the licensing status of all contractors and subcontractors is a condition precedent to recovering compensation for contracted work in this state.

Most recently the California’s Highest court held in MW Erectors v. Neiderhauser (2005) 36 Cal. 4th 412, that a sub-subcontractor (MW Erectors) who sued a subcontractor (Neiderhauser) for non-payment of more than $1.3 million for steel work performed under two sub-contracts on a private hotel project (California Grand Hotel at Disneyland) was barred from recovering their compensation because they were unlicensed when they entered into the subcontracts. Neiderhauser argued that MW’s payment claims were barred under 7031(a), because MW was unlicensed when the sub-contracts were signed and was not licensed for the first eighteen days of the year-long project in which it was involved under one of the contracts. MW performed their obligations proficiently but was barred from recovering their $1.3 million by the Court because they failed to abide by B&P Sec. 7031. Sound unfair? Write your state senator or assemblyperson and tell them you think so.

Recently, my firm represented a homeowner in a binding arbitration with this issue dominating the outcome. The homeowner stopped paying his contractor because he felt the contractor was not properly building his house, i.e., a number of defective components began to manifest themselves during construction which were denied by the contractor. The contractor filed a mechanic’s lien and sued our homeowner client for breach of contract and foreclosure of the lien. Our client cross-complained for defective construction and breach of contract. We began investigating the contractor’s background and found that he had obtained and maintained his contractor’s license by fraud. In essence, he had obtained his license by the use of sham RMOs (Responsible Managing Officers) – other licensed individuals who have an ownership interest in a construction corporation and who supervise the day-to-day operations of the contracting business. Needless to say, the RMOs this contractor had vouch for him never set foot on his projects; which is a violation of the statute. Thus, we were able to prove that he did not have a valid license, and we successfully prevailed under a B&P Sec. 7031(b) claim. Our client received approximately $400,000 in reimbursement of monies paid to the contractor and another $200,000 in attorney’s fees from this unlicensed individual. Ouch!

The lesson here is that it’s important to recognize this body of law when referring individual contractors to your clients, especially if they end up in a dispute with a contractor. A quick check of a contractor’s license may give you or your client a significant upper hand in a contract dispute if the facts show the contractor is not validly licensed. B&P 7031(b) is ultimate remedy against an unlicensed contractor and will give a consumer a judicial windfall by enabling them to collect all of the money paid to the contractor as a penalty for them not being licensed. (The status of a contractor’s license can be viewed at the California State Licensing Board’s website at

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Written by David S. Roberson, Esq., Attorney, Rossi, Hamerslough, Reischl & Chuck · Filed Under Contractor Laws, Contractor Licensing, Legal, Real estate | 3 Comments 

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