Add A Pool, Lower Your Home’s Value
July 14th, 2007 · 6 Comments
A recent thread over at Trulia Voices* pondered the question of the ROI of adding a pool to a property. The answer will almost certainly vary depending on geography and price point, but here in the Menlo Park / Palo Alto / Los Altos area and surroundings, a pool is usually a negative ROI investment.
Easily 70% of my buy-side clients, and 90% of my buy-side clients with kids, are very clear that they want a home without a pool. There appear to be several reasons:
-
Safety: Parents in this area tend to be hyper-protective of their kids, and even with an elaborate fence around the pool, parents just don’t feel comfortable.
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Cost: It costs easily $200/month or more to maintain a pool if you consider all the expenses, including putting aside a reserve each month to cover large periodic expenses. Most home buyers, especially first-timers, are stretched to the limit financially simply with the purchase of the home, and the last thing they want is another expense, especially a non-tax-deductible one.
-
Space: With the common 5000-6000 sq foot lots around here, a pool simply eats up too much of the yard. Los Altos tends to have much larger lots, so it’s not as much of an issue there.
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Weather: Silicon Valley’s mid-Peninsula tends to have relatively mild summers. Sure, we get 90 degree days, but we certainly don’t get many 100+ degree days as do our friends only 20-30 miles further inland. And while our winters are also relatively mild, there are easily 6 months per year when an unheated outdoor pool is simply too cold to enjoy.
In our still-hot market, the key to maximizing sales price is to attract the largest number of buyers, and pools quite simply scare away a large number of buyers.
Having said that, if you’re considering building a pool in this area, will be living in your home for a number of years, and will enjoy having a pool, then by all means go ahead and do so. Just don’t build a pool as a way of necessarily increasing its value.
——
* Full disclosure: I and my friend and colleague Pat Kitano of Transparentre.com have launched a consulting company, and Trulia is one of our clients.
Picture courtesy of Microsoft Clip Art gallery.
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A friend of mine is a real estate broker in the Midwest. I don’t want to be more geographically specific for reasons that will soon become obvious.
He’s representing the estate of a man who died at a ripe old age. A prospective buyer comes to see the property and asks the not uncommon question, “What’s under the carpets? Slab? Hardwood?”
My friend, being a well-trained and astute individual, responds correctly, “I’m not sure. Let’s check.”
They go to one of the registers and pry it loose so they can pull away part of the carpet and see what’s underneath it. They notice what looks like a couple of old telephone books in the register. They pull them out…piles of cash! Nearly $50,000! The old man apparently didn’t trust banks that much.
The trustees, of course, were quite happy with this development.
Here’s the question: What if the money hadn’t been noticed before the transaction consummated? What if the new owner eventually found the money? To whom would it technically belong?
A crucial distinction in real estate is that between “real” and “personal” property. With the PRDS purchase contract we use in our area, generally speaking, what’s affixed to the property — cabinets, chandeliers, window fixings — is usually considered “real” property and stays with it unless specified otherwise in the contract. What’s not affixed to the property — furniture, books, kitchenware — is usually considered “personal” property and goes with the seller unless specified otherwise.
Since the pile of cash was not nailed in, there’s no doubt that it would be considered personal property and the seller would take it with him in the case above where it was discovered before the transaction closed. But if nobody had noticed until afterwards? I’m not sure. Anybody want to take a stab at it?
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Marty Van Diest of Wasilla, Alaska, hosts this week’s real estate Carnival. Head on over and check it out.
Haven’t had a chance to look everything over, but the winner, Bryant Tutas, definitely went above and beyond the call of duty in creating his post, Lead or Prospect, Are You Buying? where he completely skewers leadgen companies in a spoof video ad. Bryant, if you ever get bored of real estate, consider Broadway!
Having just been on an a cruise to Alaska, I was curious where Marty lives. Here you go!
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Finalists For Inman Innovator Awards Announced
June 25th, 2007 · 4 Comments
Inman News just announced the list of finalists for the 2007 Inman Innovator Awards. I started reading through the list and saw many familiar names and companies…
Most Innovative Brokerage or Franchise…Coldwell Banker? Check. John L. Scott? Check…
Most Innovative Web Service…Trulia Voices? Check. Zillow Q&A? Check. vFlyer, Wellcomemat, and Cyberhomes? Check…
Most Innovative Technology…Google Street View? Check. Meebo? Check. Jott? Check. MyBlogLog? Check. Altos Research’s Market? Check.
Most Innovative Blog…now this should be interesting. Transparent Real Estate? Check. Patrick.net. Hmmm, not sure about this one, but yeah, ok, Patrick was certainly an innovator on the “Sky is falling” side of the equation. Bloodhound Blog? Check. Redfin’s Sweet Digs blogs? Check. Real Estate Tomato? Check.
And then…??? Little old me?
Don’t know what to say. I’ve been working on this blog for some 9 months now, have made a lot of friends, have learned a lot, have gotten some exposure, and have had a lot of fun. If the powers that be at Inman decide to nominate 3 Oceans, who am I to argue?
My thanks go out to the awesome contributors on my site: Chris Iverson and Bart Marchioni of Keller Williams, Ana Hays of Alain Pinel, Christine Kani of Equitas Capital, Ann O’Connell of Solstice Staging, and David Roberson of Rossi, Hamerslough, Reischl, & Chuck.
See you all at Inman!
—————–
P.S. In the fully transparent spirit of Web 2.0, I should reveal that:
1) Pat Kitano, author of the Transparentre.com blog which was also nominated, is my business partner in a new venture that he and I have started.
2) This new venture, which, amongst other things, provides consulting services, is currently engaged by Trulia, also mentioned above.
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Mea Culpa: Realtors (R) Get One Year Reprieve To Continue Their Morning Drive Routine: Cell Phone Yakking/Latte Chugging/MLS Checking
June 25th, 2007 · No Comments
I recently stated that as of July 1st, 2007 — 6 days from now — California’s new ban on holding a cell phone while driving would go into effect. It turns out I was wrong, and for that I apologize. Mea culpa!
Reader Jennifer pointed out in a comment that the ban doesn’t take effect till July 1st, 2008, not 2007.
Indeed, she is correct. That means instead of having only 6 days to mend our ways, we have a full 371 days to continue our driving-while-cell-phone-multitasking routine…
Thanks Jennifer!
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Just Bought A $26M Atherton Mansion? Here’s How to Keep Zillow From Finding Out
June 20th, 2007 · 1 Comment
An interesting question came in yesterday through my Meebo chat box…is there any way to keep the public (and Zillow, for that matter) from finding out price for which a home sold? What about keeping the name of the new owner confidential?
I chatted with some of my friends in the escrow business and here’s what they told me…
Keeping the price confidential: Fill out a certain form with the escrow company specifying that you want the price to remain confidential. When they record the document at the county, they’ll arrange for the transfer duty stamp to be stamped on the back instead of the front of the relevant page. When that document subsequently gets scanned for the public record, only the front — not the back — is processed. Voila! The price doesn’t appear on the county’s web site records, and thus (presumably, at least) the prying eyes of Zillow and the general public won’t see it.
Apparently it may still be possible for a determined individual to find out, however, by going to the county and insisting on seeing the original document.
Keeping the new owner confidential: Arrange to consummate the purchase in the name of an LLC, Trust, or other entity, and put the address of said entity as a post office box.
So there you have it! The future owner of this little Atherton delight (listed by perennial Atherton mega-lister Mary Gullixson) can rest easy at night…snooping neighbors won’t know exactly what deal he got!
Disclaimer: I am neither an escrow expert, nor an attorney. The methods described above may or may not in fact be correct, and if they are correct in any one particular county, they are not necessarily correct in your county. Before embarking on your anonymous home-buying adventure, please consult with an escrow expert and an attorney.
‘Nuff said.
Photo from mlslistings.com
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Tony Longo and Nick Sudano, the brains behind CondoDomain, just announced that they’re moving beyond the business of marketing condos nation-wide and into the business of brokerage itself, apparently specializing in downtown Boston condos. Their site www.anthjames.com, which just launched, is slick, slick, slick, with a professionally done intro video on the home page, which is well visible, but does not appear to slow the site down.
Their press release touts a concept that’s long been lacking in real estate: choice. Traditionally in this business, “choice” has meant “You list with me for 6% or you list with him for 6%.” Tony and Nick’s offering on both the buy and sell side is basically:
- “We’ll give you a full service experience, do everything for you, and charge you a fair price”
or
- “If you’re willing to do part of the work, we’ll charge you less on the sell side, and refund you some money on the buy side.”
The latter offering is basically in direct competition with perennial bad boy Redfin’s offering, in that the client hosts open houses themselves on the sell side or goes to open houses on his own on the buy side. Time will tell how well this concept plays out in the Boston market.
Good work, guys!
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The Tuesday edition of the New York Times had an interesting article on the impact of school quality on home prices (note: article may disappear behind a paid firewall shortly.)
A study commissioned by Trinity College looked at the impact of school quality — as measured by test performance — on home prices in West Hartford, CT. (Please ask Athol Kay for the correct pronunciation. Hint: I believe the “r” is silent.)
The study found that a 12-percentage-point advantage in test scores on the Connecticut Mastery Tests corresponded to a $5065 increase in home prices. Our friends at Trulia note that average home prices in West Hartford are around $320K, so the $5065 delta corresponds to about a 1.6% increase in home prices.
I’ve been meaning to run a similar analysis for our market here in the Bay Area. Given the huge disparity in prices between, say, Palo Alto and Redwood City, I suspect home prices here are a lot more sensitive to school test scores.
Image courtesy of www.schoolsecurity.org
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Home Buyers on the Peninsula Ignoring the San Francisco Chronicle’s Sage Advice?
June 17th, 2007 · 7 Comments
One of the real estate headlines last week in the San Francisco Chronicle read Would-Be Home Buyers Hesitate. Sufficiently intrigued by the gaping chasm between the headline’s implications and my day-to-day experience on the ground, I read through the article, where I found out:
The Bay Area real estate market has become a giant game of chicken. Just 18 months ago, buyers swarmed open houses waving piles of cash. Now they are staying away in droves, waiting for prices to fall.
Whiskey Tango Foxtrot?
Exhibit 1: Recent transactions and number of offers. (These were transactions in which somebody in my office represented either the buyers or the sellers.) Many homes are still attracting multiple offers.
Exhibit 2: Pricing trends in Palo Alto. Looks like a pretty healthy market to me!
Exhibit 3: Colleague and fellow number-cruncher Steve TenBroek, a two decade veteran of business in these parts, says the local market is “tighter and hotter than it’s ever been.” His historical view is that inventory tightens in each subsequent up market, partly due to California’s infamous Proposition 13.
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