Every now and then you come across a home that’s just enchanting and has a story that’s simply begging to be told.  Suzie Provo — friend, colleague, and a top local agent — had one such property on tour this morning:  730 Seale in Palo Alto.

Come with me as we take a walking photo tour…

(more…)

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Seen on Webster street, a relic from the early 1980's…

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Regular readers know that I’m a big fan of using electronic signatures and that the package I use is Docusign.  Their PR firm recently interviewed me for a podcast, which was released this morning.

Docusign’s Tom Gonser, also in the podcast, says that their goal is to “become a verb.”  People will start saying, “Can you Docusign this” just like they say “I’ll Fedex you this document.”

Click here for the podcast.

The company has also started a blog, which you can find here.

Full disclosure:  For the record, I am not on Docusign’s payroll, nor was I paid in cash or kind for doing the interview.   As a Beta tester of their new platform, I believe I may qualify for a discount in the future, but that discount also applies to their other Beta testers.

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Let’s continue the saga of Bob and Betty, our hypothetical first-time home buyers who were introduced in the first of a series of articles I’ll be writing.

We met at 9am sharp on Saturday morning at my broker’s office in downtown Palo Alto. Though it’s easier to view homes with clients during open house times, I prefer to do first time tours when nobody else is around.

I had an ambitious tour planned: 12 homes in 4 towns along the 101 corridor. Always exhausting for everybody involved — every time I do this I have more liking for the part of the Redfin business model where clients do this bit themselves! — but nonetheless an important part of the whole process.

While driving, I pointed out important things about the neighborhoods we were in: The typical types of homes, the price ranges, which school district it belonged to, whether it was unincorporated or not, whether it was in a flood zone, where the nearest parks and public services were. I asked them to comment on what they liked and didn’t like in each neighborhood.

At each home we went through the same process, slowly at the first couple of homes, and then more quickly. “What did you like? What did you not like? What did you think of that kitchen? Do you like skylights? Fireplaces?”

By the 5th home I’m usually able to “get it” about what clients are looking for, and with this new knowledge, I crossed out 3 of the remaining 7 homes we had to see.

Suitably tired, we pulled back up to the office around 1pm to review what we had seen, what they had liked, and what they had not liked. I explained the next bit of the process: getting pre-approved. I’m happy to spend a few hours as a sort of “interview” with prospective buying clients, but before I invest too much more, I need them to put some skin in the game too by getting pre-approved. I generally find that if they’re not ready to dig up their financial records and go talk to a mortgage broker, then most likely they’re not ready quite yet to buy a home.

Betty was quite excited about three of the homes we had seen, but it was clear that Bob was losing interest pretty quickly. “Yeah…but nine hundred thousand dollars?” was his most common refrain.

We pressed in on that. Bob had been doing his homework the last week and pulled out all the discouraging figures he had found. Housing starts are down. Interest rates are up. Affordability is down. Condo developments in Las Vegas and Miami are being cancelled. How in the world could prices stay where they are here?

Prices in the Bay Area are indeed a pretty head-scratching discussion topic as they continue to defy gravity, pessimism, and seemingly the laws of economics year after year. I told them bluntly that neither I nor anybody else could guarantee anything about prices here. It is indeed possible that prices could collapse…by 40%…overnight…immediately after they bought a place. Possible? Yes. Probable? No.

I pulled up my secret weapon, Google Earth, on the flat screen wall monitor in the conference room. I zoomed in on the Peninsula and asked two questions: 1) How much land is technically available to build on? 2) How much land is actually available to build on.

The answer to the first question is: tons! From the Bay going west pretty much to Highway 280, nearly every square inch of land is already filled in. From the 280 west to the ocean, there are only a smattering of towns, like Half Moon Bay, Pescadero, and La Honda. The mountains make it difficult to build in that area, but we could certainly fit several hundred thousand more homes there.

However…it ain’t gonna happen! Most of that land is owned and/or protected by Federal, State, County, or City governments, private trusts, conservatorships, parks, and so forth, and not much building is going on.

If you can’t go West, then you have to use the Manhattan strategy: go up. Again, that ain’t gonna happen. San Francisco and San Jose have modest but growing skylines of high-rise buildings, but in between it’s rare to find any structure taller than 8 or 10 stories, and for the most part it’s only up to 3 stories tall. Those zoning restrictions aren’t going to be changing any time soon.

Essentially, 50% of the classic economic supply/demand equation is pretty much fixed, so the real question is what will happen with demand?

Again, at least for the short and medium term, the answer to that is pretty clear: demand is, and will likely remain, robust. Google and other local tech companies are doing well. Venture capitalists are pulling out their wallets again. Start-up nirvana 2.0 is here. Immigrants from across the country, and indeed the whole world, continue to move here.

So, could prices fall by 40% overnight?  Absolutely! But in the only scenario I can come up with in which that happens — a scenario which involves an earthquake, a terrorist attack, and bankruptcies of the top 5 tech employers in the area…all within 3 months of eachother — falling equity may not even make the top 10 list of concerns for many people.

We parted company, and they promised to get back to me within a few days about whether they were ready to proceed. I had my doubts, mostly about Bob.

Sure enough, a few days later I got a phone call from him. “We’ve decided to wait it out,” he said. “We’re just a bit nervous about these prices, and we’re not in a big hurry to buy.”

We agreed to keep in touch every few weeks and see how things developed.
Welcome to real estate in the Bay Area.  Prices are high, and you need a certain amount of faith and intestinal fortitude to dive in for the first time.

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If you are a reader of The San Jose Mercury News, or any other paper or media outlet, you know that there is a growing issue associated with home buyers who purchased their homes using subprime loans and are now facing foreclosure as they are unable to keep up with their payments when their rates adjust.

On Sunday, March 17, the San Jose Mercury News ran an article describing how an agent and lender with Century 21 Su Casa Realty violated a number of lending laws and ethical guidelines to get people to purchase homes which are now in foreclosure, in some case because the buyers couldn’t even afford the first payment.

While it is a stain on the already tarnished image of Realtors, it is easy for us in Palo Alto to say ‘what a shame, it won’t happen here’, or words to that effect. But, what is the effect of this issue on homebuyers in Palo Alto and the surrounding communities?

Rachel Van Emon with OPES Advisors, a financial services firm with offices in Palo Alto and San Mateo, recently sent me an article that discusses the effects of impending legislation and revised lending guidelines that will affect the ability of buyers to qualify for products like the interest only loans that so many of us use to buy our million dollar teardowns in Palo Alto and surrounding communities.

The highlights are:

• The Department of the Treasury has issued a Guidance on Guidance on “Nontraditional Mortgage Product Risks.”
• The Guidance specifies “nontraditional” as those loans allowing the deferment of principal and/or interest payments – not just sub-prime loans.
• The Guidance states that borrowers for these products are to be qualified at the “fully amortizing and fully indexed payments.” This means that qualifying payments will be bigger, and it will take more income to qualify.
• The new guidelines are to be in effect by 9/07. Some lenders have already adopted them, and many more will do so in the coming months.
• Virtually all lenders have cancelled their programs allowing 100% financing on a Stated Income basis.
• Guidelines have tightened around lending when other “risk factors” are present such as 100% financing, low reserves, high debt-to-income ratios and condo properties.

In short, it’s going to be harder to pay for that million dollar teardown in Palo Alto starting now, and especially in September.

The big question is whether these changes in lending laws will cool the red hot housing market we are currently enjoying, or if the Valley’s amazing ability to generate disposable incomes and wealth will overcome another hurdle to home ownership. Stay tuned . . .

The entire article is posted for your reading pleasure. Click here to view it.

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I’ve had this eerie feeling for a couple of days now that somebody was, well, paying more attention to me than they should. Nothing I could really put my finger on, just a general suspicion.

I think I’ve found the culprit:

Anybody want to fess up?

Mike?

Pat?

Greg?

The Sellsius boys?

Teresa?

Athol?

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Larry Cragun at Mortgages Undressed (one of the more creative names in real estate blogging) hosts this week’s real estate carnival, consumer edition.

Our very own Ann O’Connell, a stager who contributes stellar content to compliment her stellar staging, won this week’s bronze with her entry on taking advantage of the current spate of good weather (yesterday being an exception) to make your home presentable.

Silver went to Amy Fontinelle’s explanation of the need for a home inspection.

Gold went to Athol Kay, whose slick and shiny, newly re-designed (and FINALLY converted to Wordpress) blog muses about a home that really needs a dumpster…and, I might add, a good stager.

Thanks Larry!

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Maureen Francis hosts this week’s Carnival of Real Estate at her miOaklandCounty blog. True to her Detroit-ish market she went with a Motown theme, and the clincher of the Diana Ross and the Supremes award went to a newcomer in the real estate blogging world, the FBS Blog.

FBS is brought to us by FBS Data Systems, an MLS provider. Their blog is not where you’d go to spend a leisurely Sunday afternoon of light reading; it’s an intelligent, well-written, and deeply industry-geeky look at what’s going on in the world of MLS’s today. The winning article looked at the changing landscape of MLS’s.

As a recovering consultant herself, Maureen found my penetrating analysis and highly analytical graphs in my article on the impact of bubblistas on the housing market to be worth a mention. (Actually, the numbers in that particular article were completely fabricated.)

Other mentions went out to:

• Nigel Swaby (Salt Lake City), with his article on FHA loans.
• Nina at QueerCents talks about the changing real estate environment for the LGBT community.
• Teri Lussier comments about her unexpected introduction as one of the new bloggers at Bloodhound.
• Diane Tuman from Zillow brings us a story about a neighbor from hell — perhaps somebody who would benefit from the “Make My Neighbor Move” program
• Jay Thompson tries a stripped-down approach to a real estate site.
• Seattle Housing Buzz wonders if there are too many CondoTels coming up in Seattle.
• Jim Cronin feeds us another juicy slice of Real Estate Tomato advice with a look at how to use blogging to pre-emptively answer prospective client’s objections.

Now if I can only figure out a to use my blog to get sellers to look at my buying clients’ pre-emptive offers!

Great job, Maureen!

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Hot on the heels of my tongue-in-cheek — and possibly illegal — suggestion that local Realtors pay me $50/month so that I won’t write about them, the below came by email this morning.

GoFindMeOnline promises “permanent” placement on Google for “under $1 a day.” Later in the ad they clarify that they mean “on the first page of Google.”

Tell you what: I’ll promise you a package deal. Sign up with GoFindMeOnline, send me the receipt, and I’ll throw in a “Kevin won’t write about you package” for 50% off the regular price.

The ad…

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Maybe I should submit this one to the Carnival of Brilliant Business Ideas? Maybe I should go on late night TV and try to sell this idea?

There are many reasons for people in real estate to be blogging. Premier among these are the essence of blogging itself: enjoying the process of writing, creating connections, meeting new people, educating yourself, honing your wit and writing style.

But, at the end of the day, very few of us blog for charity. Real estate is a business, this is how we make our living, and so a constant refrain is, “Where’s the money?”

Well, I think I’ve found what we’ve all been looking for: the ultimately scalable, easy to start, even easier to manage real estate blogging money-making idea.

Through sheer grit, lots of writing, a good number of incoming links, and a bit of luck, Google now considers my blog if not famous, then at least respectable, to the point where if I mention a non-celebrity’s name — say, a local real estate agent — within 48 hours my blog rises to the top 10 when you search for that agent’s name.

Realtors are nothing if not publicity-hungry. (If you doubt that, open your local paper’s Sunday real estate supplement. Have you ever seen so many happy faces smiling out at you?) One of the reasons most agents have a web site (typically branded with their name) is so that prospective clients can find out more about them.

So what happens when three of the top ten Google spots about John Q. Agent come not from John Q. Agents’ web site, but from my blog? Assuming John Q. Agent finds out about it — which, to be honest, is unlikely — he ain’t gonna be that happy. At the same time, since I’m writing a real estate blog and enjoy first amendment privileges as much as the next guy, it’s perfectly within my rights to write about John Q. Agent — as long as I don’t slander him.

So, here’s the deal: Pay me $50/month, and I won’t blog about you. Then the top 10 spaces on Google for your name will be your web site, and the local newspaper which has your listings in it, and the interview from four years ago that describes what a charitable person you are. My blog? Nowhere to be found.

Here’s the genius of this idea: Writing about lots of people takes time. Not writing about lots of people takes absolutely no time! In fact, I could become so good at not writing, that I could end up not writing about thousands and thousands of people!

Any takers?

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