Oakland Real Estate News

Some Real Estate deals can end up being complete nightmares, with villains and all! That is why you should always be doing your homework and taking notes (not necessarily literally but maybe in some cases). Real estate transactions require the right kind of effort from all parties, and if one party drops the ball, all can suffer. If you are a party to one of these transactions consider some of the following preventative care.

Create a Transaction Model

Outlining/Summarizing the transaction from beginning to end on paper may seem unnecessary but can be helpful for any party wanting to better understand the transaction. By doing this you are able to see each party's involvement and responsibility, time/deadlines for completion, your personal responsibilities and more. With a model in place you are also able to be more thorough in noticing potential problems before they arise. This totally makes sense for the first time home buyer/seller. As a realtor I try to knock out as much paperwork/signing as possible on any given day from the beginning. This let's me complete my file quickly and helps me to easily run through my checklist.

Create a specific digital folder for your transaction

I don't need to tell anyone how much it sucks to have to search your email, desk drawer or other location for pertinent documents or files. Well it can be worse in a real estate transaction. With deadlines in place once an offer has been accepted and you are in contract it makes the most sense to have all emails,scans and other docs in a central location for easy access. Creating one place for your tangible paperwork should already be a norm but another for your digital files is almost a necessity. I have found that utilizing apps such as Dropbox, Office 365 and even Microsoft Outlook etc. to create transaction specific folders has been a huge help that most realtors now take advantage of. With these tools in place you can conduct most of your transaction directly from your smartphone or tablet. In addition to that your files are shared across different devices making it easy to utilize a printer or scanner that is only connected to a specific one for example. There are many advantages to these applications.

Keep People In The Loop

As professionals routine knowledge and information can sometimes seem minimal and/or a "given". But being reluctant to share it can sometimes result in problems in a transaction. It is very important to keep necessary parties in the loop of what is going on with the deal and any new occurrences or situations. The seemingly smallest left out detail can kill a deal or weaken a buyer/seller's position usually costing them money in the long run. Keeping lines of communication open is important. If you have a question don't be afraid to ask it because getting the answer may prevent headaches. Be sure to include all necessary parties in emails by putting their email addresses in the "To:" field as opposed to the "cc" or "bcc" fields. This prevents your recipients from accidentally getting emails in their spam or junk mail. You don't want to take chances. Email and even text messaging is good because it creates a time stamped trail which prevents confusion and disagreements. Buyers and sellers as well as realtors, lenders, appraisers, escrow officers, inspectors etc. all have a responsibility to share information with proper parties. It is best if these parties build lines of the best ways of communication at their introduction to prevent one from having to chase the other down for anything.  

Create a transaction savings

Most people feel as if they are financially prepared for a real estate transaction when they decide to get into one. Many times buyers save just enough (they feel) to be able to close, and follow their lenders orders for how much (the lender said)  to have at least come that desired day. The truth is most times the amount a buyer will need is more than what was quoted initially. Keep in mind that as a buyer you don't normally pay any commissions to your realtor. But when you factor in costs along the yellow brick road to the closing table it can make you scratch your head. In Oakland, to make things worse, a home must have an inspected and cleared Sewer Lateral with clearance certification upon transfer which usually starts at around $4200 to complete. In a Seller's Market such as this one this cost is almost always transferred to the buyer unless negotiated otherwise.  With this, the appraisal, inspections, closing costs and other miscellaneous expenses that can come up it's better to be prepared (and it's never too late to start). Consider putting away some of your disposable income each pay period before and throughout your transaction to help with these costs. It's always better to have been prepared for some of these expenses as opposed to being hit with them right away with a deadline. Even if you are getting down payment assistance it is best to be prepared for out of pocket costs before and at closing. 

Sellers can consider doing this too. The sewer lateral issue needs to be negotiated early and is most times done prior to closing. With that in mind sellers should have its completion as a possible playing card for negotiation, keeping in mind that they don't get paid until closing. It can sweeten the deal a little to put your home on the market with an already completed sewer lateral or getting that sod job by the back porch. Sellers are getting more for their homes when there is less to do for the buyer. Smart sellers start the savings process early and get repairs and possible upgrades over time and then decide to sell after enjoying their updated home some. 

Basically with all of that being said it is best to be very well prepared and organized in your transaction which usually means taking it to the next level and maintaining professionalism whether you are the client or the professional at work. None of us are able to predict what will happen in the future. But we can choose to learn from others mistakes before making them ourselves. Stay aware, prepared and organized. 

Posted by Harold Thomas Jr. on May 4th, 2016 2:42 PM
Buying a home in a Seller's Market can generally be challenging. Buying a home in a Seller's Market in closer proximity to tech boom cities in which your desired city is in top demand can...... well let's just say you must stay confident, creative, and willing to sacrifice. Selling a home in a Seller's Market should be easy, but can be complicated as well if the proper expectations aren't set and greed sets in. 

The Oakland real estate market has always had desired pockets scattered between undesirable areas. This has evolved, and now some comparable homes in the same neighborhoods are selling at up to $200k differences in price (approximately the highest I've seen). In measuring the differences most times, the edge of the higher priced "sold" home may just be nice upgrades/originals and a spectacular stage job. These "sold" price differences can make it frustrating for realtors when looking for comparable homes for a client's Comparable Market Analysis. Some buyers are so frustrated with writing offers just to get out bid that they want to go for it with a very high offer over asking price. The problem that can stem from writing an offer too high however is the appraisal will come back short of the offer price, which will require the buyer to make up the difference. The same frustration sets in for the seller most times when they are excited by the high offer only to get a call from their agent about the buyer wanting to renegotiate down to the actual appraised value. In those cases sometimes seller greed sets in and the property sits on the market only for the listing to expire.

The truth is, some homes (sold price) probably just shouldn't be used as comparables when it comes to creating a CMA (at least in the Bay Area). There are exceptions to this, some that I use each time I create an analysis. For instance, when I create these reports I most times always do two:

One of them being an analysis that includes homes on a top tier (well staged and very nicely upgraded with close comparables such as rooms, baths, and square footage), a mid tier (not so upgraded but originals and comparable features), and a lower tier (tenants, fixer-ish, older looking, and not great condition). If I am unable to find these within a close radius I spread out a bit and sometimes increase room amounts and square footage until I get what I need. The most important thing in this case is letting your clients know not to use the value of the analysis given by the software. Using the method above will have your final numbers somewhat inaccurate but to a certain advantage. This allows your client to see an analysis of a few kinds of properties (condition varying) with similar features. Seems elementary, especially to experienced realtors, but in Oakland this is almost a must.

For the buyer this will help them strategize their buying in being able to be creative with directional ideas to stay in budget with a mid tier or fixer-ish purchase, or consider spending a little extra for a finely renovated home that already shines.

For the seller this will enable them to equally strategize their sale with a possible 203k/similar renovation loan or out of pocket spending to deliver a polished/upgraded home to the market that would sell for more, or sell as is at an acceptable price still with a usually quick turn around.

The other analysis is what I refer to as my Quick and Dirty Comps. With this analysis I basically search out homes with the closest comparison to the subject property condition wise, square footage and sold for square footage, bedrooms and baths etc. Without the use of condition tiers like above this one gives a better perspective of value and should give the buyer/seller a more precise idea of what the subject property is worth. 

Individually, most everyone has their own ways of comparing homes as realtors, appraisers and even sellers and buyers. There can be good and bad comparisons sometimes done by realtors and even appraisers, some traveling from a surrounding city that are not familiar with the local real estate market. If they bring their area specific method from the real estate market in their city 20 miles away, you might get an inaccurate valuation. This can drive any side in the transaction CRAZY if it is from the appraiser, so don't be afraid to dispute an appraisal with your own information. 

The truth still lies in the fact that the fair market value is usually determined by what the market is willing to pay. In the case of the Bay Area there are many residents with higher and growing incomes willing to pay amounts way over appraised value. With that being said evolution of different areas is occurring and we are experiencing extensive change. If you will be buying or selling in today's Bay Area market be sure to do your homework on the trends. 


"UPGRADE! UPGRADE! UPGRADE! and create a jewel among others!"

Posted by Harold Thomas Jr. on April 9th, 2016 1:54 PM
When it comes to the desires of home buyers I've been hearing more of lately; "something with a Granny Unit", "must have an in law suite", "need an additional room or garage conversion" and so on. Even when going to the weekly marketing meetings Realtors more and more are asking if anyone has listings with these features. In reality these home features have been around for years and are common in the Bay Area. Now that rent has risen the extra living space is definitely desirable to those looking to supplement their mortgage expenditure, but one must also consider our senior and elderly population. The need for senior housing has always been around. But with the extreme rise in rents in the bay area (and everywhere else for that matter) the need is even greater due to affordability.

So what are some options for these homeowners or buyers? A few come to mind, but would depend on the situation.   

The FHA 203k loan may be a good option for those looking to purchase there first home and perform upgrades/repairs prior to moving in. This program can also be used by homeowners for deferred maintenance and/or upgrades. These loan types offer one consolidated loan which combines a principle loan amount (money for the purchase of the home) with the amount the borrower will need for repairs. This allows the borrower to repair what they want right away as well as only have one payment for everything. This is an FHA loan, so the qualifications may be more strict than other programs but as far as credit, all you need from what I know is a 620. NO CREDIT? NO PROBLEM! They can use what they refer to as alternative credit or non-traditional credit in which a person is able to qualify with proof of on-time rent payments for the prior twelve months in addition to 3 other accounts that have been paid on time within the same time frame. 

Buying a home below market value may sound easier said then done but they're out there. Normally if a home is being sold for less than market value it needs a considerable amount of work done. This is where buying real estate gets risky, but this may be an opportunity to add an in-law unit feature in addition to getting other necessary repairs done and furthermore possibly getting a deal! It can be a daunting task trying to get financing for fixer homes. And if it is an investment property the whole twenty percent down requirement is not working in the buyers favor either. In some cases if there is a conventional loan being used certain repair needs can slip through the cracks. If the home is bought for a below market rate through great negotiations for needed work by their Realtor, the buyer may have the opportunity to get a Home Equity Line of Credit or a HELOC. This allows the homeowner to draw funds on the equity of the home usually up to a stated market value. So let's say the home was purchased for $325k, but if it were repaired it would be worth $360k. The HELOC would allow the homeowner to draw up to $35k ($360k-$325k=$35k) for whatever repairs (or anything else) the owner needs. This can be a great way to finance an in-law unit.

Fannie Mae now offers a conventional fixer upper loan referred to as the Fannie Mae Homestyle Renovation Loan. This option allows homeowners flexible down payment options and is available for owner occupied or second home purchase/refinance for 1-4 units and investment purchase/refinance for 1 unit. Very similar to the FHA 203k loan the borrower will still have a consolidated payment. This loan will allow the borrower up to 50% of the after-repair value for their renovations! It even allows for certain renovation related costs to be wrapped into the loan as well. Some of these costs include inspections, architectural costs, permit fees, reports, appraisals and engineering to name a few. You can even do some of the work yourself and be reimbursed for the materials! This is definitely one to consider if doing a big job. 

Hard Money Loans aren't for amateurs and I honestly wouldn't recommend them for most. They can be a means to an end however for those with no equity in their home or dings on their credit. Usually the terms are not the best so if this route is to be taken it is strongly recommended to have a good plan. In the case of building an in-law unit there may be reason to move forward with hard money. A good one in my opinion would be if there was a particular long-term tenant in mind that were desiring to rent the completed unit at a considerable return. If the monthly return on the unit in addition to the amount of value added to the property with the addition is worth it to the owner (everyone's circumstances are different) then hard money just may work. But it would be best to ALWAYS use caution when getting a loan like this as the word loan shark goes hand in hand with them.

Whatever your repair needs or renovation desires it is best to always consult a licensed professional no matter how small the job. Use your best judgement when using handymen and unlicensed service providers. They are not always a bad option and can usually save money. Just know the risks and get as many guarantees and warranties as possible. Also don't be afraid to get creative and consider trying something new. 

Good Luck!
Posted by Harold Thomas Jr. on January 28th, 2016 10:26 PM

In my more recent transactions I've had buyer clients react to the non-staging of homes very negatively. Yet when the home is sold it still sells over the asking price but for considerably less than one that was beautifully staged. When you see the home after the new owner takes possession (if it is owner occupied) it turns out beautiful + worth more money (in California's bay area market anyway). Many times homes have been rented out for a long duration of time with absentee owners, most instances outside of the city or state, that could care less about fixing the place up let alone staging it. That sometimes can spell out an opportunity to get a deal, update the home and build instant equity.  In today's market any little bit of help for our buyers is good. Turning the conversation from "This horrible paint and floor job sucks!" to "This home seeks your creative potential" has helped a few of my clients get diamonds in the rough. 

Now from the other end of the spectrum as a sellers agent selling a home worth more than $300,000 (sometimes less) I would most times always recommend staging. Staging works to the benefit of the seller in many ways. One of the biggest in my opinion would be the effect it has on the wealthy buyers with the mindset that there will be a bid war. There are several other benefits of a professional stage job, and normally if one is implemented in today's market it spells out a happy seller in the end accepting an offer well over asking price. I've seen professionally staged homes in somewhat undesirable neighborhoods sell for over $200k over the asking price!

Be also weary as a buyer of the staging jobs when looking at homes and try to figure out what holes are being covered up with a nice painting or throw rug. You'll never know what kind of things you may have missed once you become the homeowner and the staging has been removed  if you don't do your due diligence and ask questions. 

Posted by Harold Thomas Jr. on November 18th, 2015 2:14 PM

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Thomas-Chambers Company
BRE # 01208644

449 W MacArthur Blvd.
Oakland, CA 94609