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Alain Pinel Realtors Insights Industry Insights

The Benefits of Paperless Transactions

October 19, 2014

Author: David Bellamy, Chief Financial Officer, Alain Pinel Realtors
This article ran in the Aug 8th, 2014 Palo Alto Daily News publication Premier Homes, pg 10.

Photo Credit: Christian Schnettelker via Flikr.
Paperless transactions are becoming increasingly common in the real estate industry, and their advantages are many – making real estate agents more efficient, and ultimately benefiting their clients immensely.
Paperless transactions allow documents to be sent by an agent, and reviewed and signed by a client, any time of day, from anywhere in the world. Everything from contracts to disclosures to property reports are all able to be shared electronically, as well as signed digitally, making transactions faster, streamlined and more thorough.
In the competitive, swift-moving Bay Area real estate market, the need for efficient, fast transactions is paramount. With how common multiple offers and short transaction windows can be in our market, the ability to send, review, and sign documents electronically can put clients at a huge advantage. In fact, with many of our clients working in and around the technology industry in the Bay Area, it is frequently an expectation of buyers and sellers that their agent be able to conduct business via a digital rather than a paper-based process.
Additionally, with an influx of international buyers in the Bay Area, along with both buyers and sellers often travelling for work during a transaction, clients are often looking to do business in a more mobile way. In such cases, going paperless can help facilitate a more streamlined transaction, giving clients the ability to view and sign all forms wherever they are, even from their smart phone or tablet.
And of course, there is a significant environmental benefit, with this electronic shift removing the paper waste of a traditional transaction.
On the brokerage level, Alain Pinel Realtors has partnered with SkySlope, the industry leader in digital transaction management solutions. This tool gives APR agents access to completely paperless transaction processing. SkySlope allows agents to manage their transactions electronically, creates a platform for a more efficient review and feedback process between office managers and agents, and provides agents with a way to immediately share documents with their clients electronically. The tool also ensures that all necessary details have been taken care of from a contractual perspective, and that everything is in compliance with industry regulations.
When new tools such as this benefit clients, agents, brokerages, and the environment as a whole, it is hard to think of a downside. But going paperless still requires a shift in mentality from working with traditional hard copies of documents, and so, necessitates a different way of thinking among both clients and agents.
As a whole, while a period of adjustment is to be expected, the move to a more paperless world in real estate will help agents and clients on every level – from speed to mobility, the benefits are great.


About Author:

David Bellamy is the Chief Financial Officer at Alain Pinel Realtors where he oversees all accounting functions, budgeting processes, strategic planning, financial reporting, and human resources to support the organization. Prior to joining APR in 2007, Mr. Bellamy was in executive management with The Body Shop, most recently as its CFO, VP Finance, Real Estate & IT for the Americas Region.

Industry Insights Legal Insights Marketing and Technology Insights

Drones in Real Estate – When Technology Surpasses Policy

July 22, 2014

Author: Tom Flanagan, Vice President of Technology, Alain Pinel Realtors
This article ran in the July 11th, 2014 Palo Alto Daily News publication Premier Homes, pg 10.
Unmanned Aerial Vehicle with Camera
When looking at some of the latest real estate tech trends, one that has the potential to have a significant impact in the industry is the use of drones and unmanned aerial vehicles (UAVs). Photographers typically use these small remote controlled drones with a camera to take stills and video of a property, and their use is becoming increasingly commonplace in the real estate industry.
The use of drones for real estate purposes gives consumers, buyers in particular, a unique view into, or over, a listing. They are able to tell a story about a property that wouldn’t otherwise be achieved with traditional photography, and are wonderful for displaying waterfront properties and listings with a lot of acreage. From their vantage point of about 100 feet above a property, they are able to capture images that an airplane or helicopter would not, offering a truly unique perspective.
However, as an emerging technology, there is a tremendous amount of inaccurate information and confusion regarding their usage. Grey area and misinformation surrounding the legal use of drones abounds, and they have become a polarizing topic that often conjures images of military use or spying.
In reality though, UAVs and drones have been used with good intentions, primarily by hobbyists, for decades. But when it comes to commercial use, drones are an example of technology surpassing policy. Technology is moving at such a fast clip, it is difficult for government bodies to introduce legislation around them.
To date, there has only been one UAV pilot fined by the FAA. While the FAA did lose that case, they appealed it, which negated the win for the pilot. Additionally, a New York real estate brokerage was just subpoenaed by the FAA for drone use. Legislation surrounding use remains nebulous though, and Congress has issued a deadline to the FAA, requiring the agency to issue regulations and guidelines by 2015.
While government issues and questions about privacy remain, this medium offers tremendous value to real estate consumers, offering a sneak peek into a property that wouldn’t otherwise be available. There are safety concerns as well, and ensuring each drone operator is licensed after being properly trained, as with a motor vehicle, would be a responsible course of action. Finding this fine balance between legislation and innovation though will definitely pay off for the real estate consumer in the long run.


About Author:

Tom Flanagan is Vice President of Technology at Alain Pinel Realtors and is responsible for overall technology strategy and implementation throughout the company. With over a decade of experience in the technology industry, he brings a wide range of knowledge in technology, online platforms and new media, with an emphasis on design and usability. Tom is also a syndicated columnist for Inman News, the leading source of independent real estate news and information.

Market Updates

Luxury is Alive on the Peninsula

April 21, 2014

Author: Rainy Hake, Executive Vice President, Alain Pinel Realtors
This article ran in the April 18th, 2014 Palo Alto Daily News publication Premier Homes, pg 10.

Last week, it was announced that the “Copper Beech Farm” estate in Greenwich, Connecticut sold for $120 million. While the property sold for $70 million below the original asking price of $190, the 51-acre estate still captured the title as the single most expensive home sale in the country ever.
While the Bay Area might not be home to the highest single-family home sale in the nation, it is no stranger to luxury. The highest property currently on the market is the impressive $69.8 million “Flood Estate,” sitting on over 90 acres in Woodside. Communities in the Bay Area – including Atherton, Menlo Park, Los Gatos, Los Altos Hills, and many more are known for their high-end homes that fetch some of the highest average prices in the country. It is no surprise that they are consistently among the most expensive zip codes in the nation.
As we wrap up the first quarter of the year, the report remains much the same as it has in the previous year – with constrained inventory, prices are continuing to elevate, while the number of sales are slightly down when compared to last year. It will really be this next quarter that communicates the true economic direction for the year, as warmer weather and seasonal changes usually draw more sellers to the market.
While this is the case for the general real estate market, when you look at the highest price points in the Bay Area, you will see a more favorable story. If you look at Santa Clara and San Mateo counties – there are a considerable number of homes over $3 million on the market (94 and 95, respectively). While this may not seem like many, when you look at supply and demand at this price point it is reflective of a relatively healthy inventory.

What is most interesting in the numbers is the year-over-year increases we are seeing. While the rest of the market is slightly down when it comes to number of sales (-9% in Santa Clara County and -6% in San Mateo County), we are seeing high double or even triple-digit increases in the number of sales of homes priced over $3 million and $5 million – and 2013 was a good year! For both Santa Clara and San Mateo counties almost half of the quarter’s sales over $5 million happened in March alone.
While these numbers are fairly impressive, they are actually understated because these numbers are taken directly from the MLS – and at the highest ends of the market, we see more “off-market” listings and transactions. So, if anything, this means that the actual activity in the luxury market is even better than statistically reported.
As we enter the spring, one thing is clear – the luxury and high-end market is alive and well in the Bay Area.


rhakeAbout Author:

Rainy Hake currently serves as the Executive Vice President of Alain Pinel Realtors where she plays a role in managing the strategic direction of the company, and also oversees the Marketing, Technology, Training and Strategy departments. She has over 15 years of experience in the real estate industry and holds and MBA from the University of Oxford.
 
 
Community Spotlights

The Native Garden: Conserving Resources with Hardy Species

March 24, 2014

Author: Rainy Hake, Executive Vice President, Alain Pinel Realtors
This article ran in the March 21st, 2014 Palo Alto Daily News publication Premier Homes, pg 10. An old song proclaims that it never rains in southern California; some years, it doesn’t rain in the north, either. Or snow, for that matter. With the effects of the recent drought creating a need for water-rationing measures, and with both mandatory and voluntary water restrictions already in place, many gardeners are looking ahead, wondering how to adapt to anticipated conditions.
According to Rebecca Jepsen, an Alain Pinel Realtors sales professional and certified Santa Clara Master Gardener, now is the time to rethink your garden and landscape. With the Bay Area at only 39% of normal rainfall, it is critically important to decide where to allocate the extremely limited supply of water.
In the past 20 years, planting native species in gardens has come into vogue as both an ecologically and economically sound practice; replacing entire lawns is also gaining popularity. A native plant is defined as one that occurs naturally in a particular region, ecosystem, or habitat without direct or indirect human intervention, and includes everything from mosses and ferns to wildflowers, shrubs, and trees.
According to the California Department of Fish and Wildlife, California is home to multitudes of native plants: some 6,500 species, subspecies, and varieties of plants occur naturally within the state. These native plants are uniquely suited to withstand California growing conditions – including extended dry spells. Many California native plants, once established, require little watering beyond natural rainfall.
For a great native habitat garden, Jepsen recommends adding ceanothus, manzanita, toyon, ribes (currant), hollyleaf cherry, monkey flower (Mimulus), coast aster, godetias, lilies, buckwheat, crabapples, and California poppy.
In addition to being drought-resistant, the benefits of planting native species are numerous. Native plants attract pollinators like hummingbirds, butterflies, bees, and other beneficial insects. An essential ingredient in the food chain, facilitating pollination can positively impact local fruit and vegetable yields, while supporting and growing the population of these vital pollinators, whose numbers have been on the decline in recent years.
Once established, native plants are low maintenance.  While it’s impossible to escape weeding and watering altogether, native plants will require less pruning and grooming overall.  Because native species evolved alongside local predators, the plants developed an innate resistance to these pests; when native plants are grown in appropriate conditions, they require little or no fertilizer or pesticides.
Native species can also help defend against invasive species taking hold.  Non-native, or exotic species are considered invasive when, due to a lack of predator in an ecosystem, they are able to outcompete native species, disrupting important ecosystem processes. In the Bay Area, colorful choices like Scarlet wisteria, and Periwinkle are considered invasive – having been introduced as ornamental, over time, these plants escaped the garden and became established in wild habitat.  This causes harm in myriad ways, among them depleting precious soil and water resources, creating a higher risk of wildfire, and, by not holding soil well, making land more prone to erosion.
Making the switch to a native garden can seem daunting, but determining the characteristics of the garden can simplify the process.  The primary considerations for a native garden are similar to those of a conventional garden: amount of sun and wind exposure, site temperature, water source and delivery method, elevation and topography, and soil factors like type, pH levels, and drainage.
And, as if the natural benefits weren’t enough, some local water districts offer rebates for lawn conversion and irrigation upgrades.  Checking with experts at a local nursery, or searching online will offer an abundance of information to get started on a garden to enjoy, whether it never rains, or it pours.
Photo Credit: Patrick Doheny via Flikr.


About Author:

Rainy Hake currently serves as the Executive Vice President of Alain Pinel Realtors where she plays a role in managing the strategic direction of the company, and also oversees the Marketing, Technology, Training and Strategy departments. She has over 15 years of experience in the real estate industry and holds and MBA from the University of Oxford.
Buyer / Seller Information

Love At First Sight, Connecting With Homes

February 26, 2014

Author: Rainy Hake, Executive Vice President, Alain Pinel Realtors
This article ran in the February 21st, 2014 Palo Alto Daily News publication Premier Homes, pg 10.

While “crush” and “love” are words usually used in the context of relationships – they can apply to homes as well. In fact, according to a poll conducted by Realtor.com, the process of buying a home can surprisingly mirror the quest for love. In their search for the one, prospective homebuyers develop “home crushes” on properties they see online or in person – they think about them and are anxious to get another peek.
If you’ve been through the home buying process, you’re probably familiar with this – and you’re not alone. Of the 1,000 people in the poll, 69 percent said they had a “home crush” and were drawn back to looking at it more than once.
Not unlike romance – the poll also showed some differences between the sexes when it came to their crushes. Women (41%) were more likely than men (30%) to develop crushes on homes that were out of their price range. Men were also more likely to move on quickly – 36% said they develop new home crushes weekly, whereas only 29% of women reported the same.
However, both men and women were able to agree on the top attribute that make them fall in “love” – 54 percent of women and 46 percent of men identified outdoor living spaces. For men, the next most alluring attributes included garages (40%), curb appeal (35%), and open floor plans (30%). Attributes identified by women only differed slightly with open floor plans (42%), curb appeal (29%), and updated appliances and fixtures (29%) finishing out their list.
While the statistics are fun, there are some lessons for both buyers and sellers can take away from the poll. The first and foremost is to just be aware that these types of emotional and personal connections can develop. This isn’t necessarily a bad thing, but much like teenage crushes, they can sometimes cloud your judgment.
For buyers, this can become especially true if you are not clear about your needs and goals. A flashy kitchen might lead to a crush on a home that completely falls outside your budget or does not meet your other requirements. That breathtaking pool you are still thinking about might make you overlook the much more practical property you look at a few days later.
For sellers, a personal attachment to our home might prevent us from being objective about price, staging or other parts of the selling process. In addition, we want to maximize the potential for others to develop crushes on our home. Here are 5 tips to prepare your house to make it more “crushable”:

  • De-Clutter and De-Personalize: While your stuff might make the home endearing to you, it often prevents others from seeing themselves in your home.
  • Appliances and Finishes: Updating appliances and finishes is an easy way to add some polish to your home.
  • Curb Appeal: It matters to everyone, because it is what most people see of your home. Having a landscaper come in and applying a fresh coat of paint makes your home more lovable.
  • Smart Staging: This means both inside and outside – if outdoor living is the top appeal, make sure you’ve staged your back patio and yard too!
  • Pricing it Right: Don’t allow your personal feelings about your home get in the way of setting a market-appropriate price.

Whether you are a buyer or seller, the process is an emotional one – and part of that has to do with the fact we fall in love with homes. For buyers, it is the immediate crush that develops when you see the perfect breakfast nook where you can imagine drinking your morning coffee. For sellers, it is the memories you and your family have created in the living room you’re saying goodbye to. It is these attachments that make it so important to work with a skilled agent. You need an objective party with their eye on your goals, needs, and budget while gently seeing you through your crushes, maybe comforting you through some heartbreak, and appreciating the connections you make with homes.


About Author:

Rainy Hake currently serves as the Executive Vice President of Alain Pinel Realtors where she plays a role in managing the strategic direction of the company, and also oversees the Marketing, Technology, Training and Strategy departments. She has over 15 years of experience in the real estate industry and holds and MBA from the University of Oxford.
Buyer / Seller Information

Local Market to Continue Growth in New Year

December 30, 2013

Author: Rainy Hake, Executive Vice President, Alain Pinel Realtors
This article ran in the December 20th, 2013 Palo Alto Daily News publication Premier Homes, pg 10.

Inevitably, despite some conventional advice to avoid it, the topic of real estate will be discussed by families and friends at holiday meals across the nation. As 2013 is quickly coming to a close, it is only natural to reflect on the past year as well as make predictions about the year ahead – and real estate is no different.
Overall, 2013 was a very successful year in the local real estate market – especially in the luxury and higher end markets this region is known for. While we have known the real estate market has been rebounding, this past year we saw that recovery dramatically accelerate. While the numbers showed limited inventory and historically low interest rates, the headlines told stories of multiple offers and bidding wars. With an influx of cash from booming tech companies and international buyers – sales and prices reached or exceeded pre-recession peaks in many of our communities. In some areas, year-over-year numbers showed double-digit increases.
While the past few months have slowed compared to earlier this year, this is likely seasonal. In 2014, The California Association of REALTORS® is forecasting a continued strong demand for home ownership to continue – with prices and sales continuing to experience further gains. The California median house price is expected to increase 6 percent to $432,800 in 2014 – and even higher in our local markets.
As real estate is often cyclic, we can expect a more balanced market between buyers and sellers. The higher prices, which are expected to continue, will likely entice some sellers. CAR predicts slight inventory increases and decreased competition from investors. This will allow more opportunities for buyers to get back into the market to take advantage of the less-frustrating market conditions that we saw in 2013.
While this less competitive market will be welcomed by buyers, it is not without its challenges. CAR expects the average interest rates for 30-year fixed mortgages to slightly increase to a still historically-low 5.3 percent. The Bay Area also has a high pent-up demand of buyers, backed by a solid job market and bustling economy. Our world-class universities, temperate climate, and culture of innovation will continue to entice foreign buyers – as prices in even our most expensive markets still remain competitive with global cities in Europe and Asia.
With all predictions, we advise caution, as no one has a crystal ball. One wild card that is worth keeping an eye on is the actions of the Federal Reserve. How interest rates are changed, as well as the expected winding-down of their bond-buying program, can have large effects on the economy – and potentially slow the housing recovery. Additionally, dysfunction in Washington continues to remain a threat to the mortgage interest deduction and mortgage finance reform, affecting housing affordability.
As 2014 approaches, a continued healthy market, coupled with less competitive conditions, should give buyers and sellers a reason to celebrate. We may not see the dramatic increases we did in 2013, but a balanced, healthier, and more stable real estate market is good news. While outside factors loom, entering the market now will ensure you take advantage of the environment that exists.
Happy holidays to all!


About Author:

Rainy Hake currently serves as the Executive Vice President of Alain Pinel Realtors where she plays a role in managing the strategic direction of the company, and also oversees the Marketing, Technology, Training and Strategy departments. She has over 15 years of experience in the real estate industry and holds and MBA from the University of Oxford.
Buyer / Seller Information Community Spotlights

Are You The Perfect Tahoe Buyer?

November 18, 2013

For many of us in the Bay Area, when we want to get away for a bit – we flee to Tahoe. That is why it is no surprise that the great outdoor playground is a very popular place for many Bay Area residents to have vacation homes. To find out what every Bay Area resident need to know when looking at Tahoe, we asked Linda Granger, Alain Pinel Realtors Lake Tahoe Manager, a couple questions.

What does any buyer need to know before looking for a vacation home?
No matter what kind of home purchase you’re making, some questions always remain: how much can you afford, what type of home appeals to you, etc. With a vacation home though it’s really important that it suits what you’re looking for: what kind of activities do you enjoy? What climate suits you? What kind of escape appeals to you? It also is important to establish what your goals are. Are you looking to rent it out? Are you just purchasing it as an investment?
Why is Tahoe so popular for Bay Area buyers looking for second homes?
Proximity is a huge factor – you don’t have to get on a plane. Tahoe is also a unique vacation environment that can be enjoyed year-round, with a full roster of both summer and winter activities in a relatively moderate climate. It’s also a huge playground where people can get away from their busy lives and just enjoy amazing outdoor experiences. There’s also something for people of all ages – so it really allows families to spend quality time together that might not otherwise.
What specifically should they be asking themselves before looking in Tahoe?
The perfect Tahoe or Truckee buyer is someone who wants to gain equity over time, may do some vacation rentals to help cover costs, and really enjoys and values the activities Tahoe has to offer. If you’re just looking for a “cash cow,” in most scenarios, you are not the perfect buyer. From there, you need to know what it is about Tahoe that appeals to you. There are so many different communities – Serene Lakes, Donner Lake, Lake Tahoe – all with different benefits. If you can describe your ideal Tahoe getaway (setting, house, views, sun, recreation, season they enjoy, etc.), we can usually pinpoint where you should purchase.
What’s going on in the market in the Tahoe area right now?
With an eventful summer all over California for real estate, the Lake Tahoe area was right there in the midst of a bustling seller’s market. Although we saw a drop in the overall volume of sales from last year this time, we are observing both the median and average prices make a steady creep up. With steadily rising sale prices, the market is continuing to create a comfortable environment for sellers all around the Lake Tahoe Basin and Truckee areas. In turn, it is offering buyers opportunities to take part in this competitive market while loan rates remain relatively low.
Are there any new developments in Tahoe that Bay Area buyers should be aware of?
There is a new development called Martis Camp that is a very high-end community which includes fantastic amenities that has really taken off. The homes are big and beautiful with much more modern luxuries and architecture – something we haven’t really seen in Tahoe before. People love that they don’t really need to leave; the community has it all, including its own ski lift to Northstar! There will always be the Bay Area contingents that love the Tahoe cabin feel and just want a cozy place to rest their feet by the fire, and others that want to be right on the Lakefront, but Martis is providing a place for those really high-end buyers that are used to the ultra-luxury homes of the Peninsula.
This article recently published in the Autumn 2013 Exquisite Living.
It also ran in the November 15th, 2013 Palo Alto Daily News publication Premier Homespg 12 


About Exquisite Living

Exquisite Living is a premier digital luxury magazine presented by Alain Pinel Realtors. The magazine immerses readers in the luxuries of the Bay Area and beyond as one flips through luxury trends, market updates, community spotlights, and of course some of the most magnificent homes and estates.
 
 
 
 
Buyer / Seller Information

The Value of A Zestimate

October 21, 2013

Author: Rainy Hake, Executive Vice President, Alain Pinel Realtors

Chances are, regardless of whether you are thinking of selling your home or not, at some point you have looked at your home’s Zestimate – the estimated market value of your home on Zillow.com. You probably have even peeked at a few of your neighbors’ Zestimates too. For some, checking their Zestimate becomes a part of their regular assessment of their net worth – watching it fluctuate with the market. But for how highly people regard them, what do they really know about their accuracy? Did you know that in San Mateo County, a home’s Zestimate is within 10% of the sale price only 38% of the time? Let’s look at why.
Zestimates, now available on over 110 million homes, are home valuations that are computed using an unknown algorithm. According to Zillow, a number of factors go into determining the estimate, including physical attributes (lot size, square footage, number of bedrooms, bathrooms, etc.), prior tax assessments, and prior and current transactions of nearby comparable homes. The dollar price is calculated three times a week and Zillow will even show you a chart comparing a property’s Zestimate history with that of your city and zip code.
However, valuing a home is never as simple as applying a formula. An algorithm never looks at your actual home, so it does not factor in major components that can greatly affect your property’s value. For instance, Zillow’s algorithm does not know the actual condition of your home. While some homes are meticulously cared for, many homes are significantly more worn. And while Zillow knows the geo-location of your home it may not have the ability to give weight to the positive attributes of this location. Some aspects, such as the views or the grade of the lot, are likely to be missed. Have you done significant improvements on your house? It’s likely these are not reflected in the Zillow data either.
This problem is even more pronounced in high-end properties. Some of the most luxury items cannot be appropriately valued without inspection – whether it is the imported tile work, the technologically advanced smart appliances, the hand-crafted finishes, the salt water pool, the state-of-the-art landscaping or the impressive views. These can dramatically alter the value of high-end homes and all are missed by a Zestimate.
So truly, how accurate is a Zestimate? Zillow actually has data about their reliability if you dive into their site. So let us take a look at how accurate Zestimates have historically been in our area:

In all three of these counties, for the majority of homes with Zestimates, they do not get within 10% of the final sales price. For San Mateo and San Francisco counties, they get less than 3 out of 4 within 20% of the final sales price. When looking at luxury homes, the difference between $2 million and $2.4 million is very significant – and yet, this is the error range that Zestimates operate within.
That is why if you really are thinking of selling your home, or just want to know the estimated market value of your home, it is essential to work with a REALTOR®. They will do an extensive comparative market analysis to help determine fair market value. In addition to knowing the local market, keeping on top of recent transactions, and having toured many of latest homes on the market, a REALTOR® can inspect many of the intricacies of your home. So, while it may be fun to feed your curiosity and track your Zestimate – at best, you are only getting a very rough estimate of your home’s worth.

This article recently ran in the October 18th, 2013 Palo Alto Daily News publication Premier Homes, pg 10.


About Author:

Rainy Hake currently serves as the Executive Vice President of Alain Pinel Realtors where she plays a role in managing the strategic direction of the company, and also oversees the Marketing, Technology, Training and Strategy departments. She has over 15 years of experience in the real estate industry and holds and MBA from the University of Oxford.
Buyer / Seller Information

Taking a Gamble with Preemptive Offers

September 30, 2013

Author: Joanne Wondolowski, Vice President and Manager of Alain Pinel Realtors Burlingame

In a normal market, listings are generally exposed to the open market and offers are presented as they are received. However, in a fast paced market, with limited inventory, it is not uncommon for sellers to set dates for when offers will be accepted.
In the Bay Area, where the market has been on fire the past year, it is actually pretty common for sellers to have these offer-hearing dates on new listings. We are also seeing a lot of discouraged buyers – who after putting in offer after offer, reviewing disclosure packet after disclosure packet, are still losing out in multiple offer situations. So what do these buyers do? They go on to the next house, find out when offers are set to be heard, and decide they do not want to wait. Instead, they submit an aggressive offer and have it dropped off to the listing agent immediately. This is known as a preemptive offer.
If the seller accepts, it is a win for both parties, right? The seller ends up with a strong offer and a short selling process, and the buyer ends up finally getting an offer accepted. While it sometimes works this way, there are also many scenarios which can complicate this. Consider these examples:

  • A preemptive offer comes in $75,000 over asking price and the seller accepts it. The property gets much more interest than expected and when offers were supposed to be heard – multiple offers are received, including one $100,000 over asking. The seller has left money on the table.
  • A seller decides to play by the rules and does not want to hear offers until Sunday. An aggressive buyer still submits a preemptive offer for $100,000 over asking. The seller rejects it and says to wait until Sunday. Come Sunday, the buyer having noticed not as much interest, submits a less aggressive offer. The seller is discontent knowing that the buyer was willing to pay more.
  • A buyer submits a very aggressive preemptive offer that the seller accepts. When the due date comes around it has only piqued the interest of 1 or 2 other buyers and neither offer is near the preemptive offer. The buyer has not only overpaid, but in making their aggressive offer, also conceded some contingencies they rather would not have.
  • A buyer submits a modest preemptive offer only $60,000 over asking price. The seller, having said they would not hear offers before the due date, rejects it and has a negative impression of the buyer in future offers. Having felt they already revealed their hand, the buyer does not resubmit an offer and walks.

Preemptive offers are risky propositions for sellers and buyers. For sellers, they never know if they are leaving money on the table by not having the full, planned exposure to the market and seeing all offers. However, rejecting a preemptive offer might make you lose the best offer you could have gotten. For buyers, coming in too low may prompt an immediate no from a seller. Trying to create an offer a seller cannot refuse may also result in overpaying or too many concessions. On the other hand, not submitting a preemptive offer may mean you never get a chance to submit an offer.
The truth is there are risks no matter how preemptive offers are handled, but the most important thing is to fully understand the different scenarios that can occur. It is important whether you are a seller or a buyer that your agent explains the market, details and walks you through the possible outcomes, and is upfront about various approaches. Communication between client and agent about different situations before they occur is crucial. While we cannot stop the reality of preemptive offers – we can prepare ourselves for them.

This article is featured in the Sept. 20, 2013 Palo Alto Daily News publication Premier Homes Page 10.


About Author:

Joanne Wondolowski serves as Vice President and Manager of the Alain Pinel Realtors Burlingame. Joanne has been working in real estate on the Peninsula for more than 25 years. She worked for 6 years as an agent and then moved into management. Joanne has built and managed 3 offices in the Burlingame /San Mateo area. For more information call Alain Pinel Realtors Burlingame at 650.375.1111 or email joanne@apr.com
 
 

Buyer / Seller Information

Does Size Matter?

September 4, 2013

Author: Bill Lewis, Vice President and Manager of Alain Pinel Realtors Los Altos

Have you ever wondered how big your house is? For many, size matters – and can often be a point of distinction when evaluating a property for purchase. Yet for something important, there seems to be a lot of questions – and questions can lead to conflict. Naturally, when buyers find out their recently purchased home is smaller than they believed, they want to be reimbursed for the difference. I recently saw a buyer who was seeking over $100,000 from the seller! However, it is often not that straightforward and only through continued education will these situations be reduced.
So who determines size and how is it measured? When a property is listed on the MLS, the square footage is auto-populated from the county records. These records are often inaccurate – as changes during construction or remodels have altered square footage without the record necessarily being updated. Yet, because they are the only official record for reference, they are often used in advertising (with a caveat about their validity and that any conflicting information and their sources will be disclosed by the seller). Other home measurements may originate from sellers, the original builder’s plans, the architect of a remodel, an appraiser when a property was refinanced, etc. The fact is that there may be many conflicting measurements from many sources. The most commonly accepted source is from the appraiser, a licensed professional who is trained to determine value, and is the sole source in determining the value of the property for the lender.
Many people often use square footage as the only criteria to establishing value when purchasing a property. Price per square foot is a common measurement used when looking at comparable properties and their selling price. However, there are many other factors that determine value, especially at the high-end. The quality of the interior finishes, the desirable lot, the appealing floor plan, the location and school district are just a few of the factors that also affect value. Many people’s criteria for determining value may differ and may be more subjective. For sellers, when determining a listing price, a knowledgeable agent is crucial as they have toured all recently sold properties and have a better reference about the pros and cons of comparable properties beyond size.
When buying a home, sometimes disclosures and warnings about potential discrepancies are not thoroughly read or understood by buyers as they get lost in the purchase contract. If a buyer finds out their home is smaller than advertised – is it then “worth” less? Not necessarily. In the example in which the buyer sought $100,000 dollars – the advertised square footage was based on the original architect’s plans. During construction, some changes were made that reduced the square footage and was not reflected in the listing. When they sought compensation from the seller, the appraisal for their loan actually incorporated the lesser square footage and found the property was valued accordingly – thus eliminating any claims that the property was worth less. An appraiser will always do his or her own assessment on square footage and not just go off the advertised size.
An experienced agent can and should ensure that a buyer understand that discrepancies may occur regarding square footage, go over all disclosures, and set realistic expectations regarding size. There are many reasons we are drawn to homes – sometimes emotional and often unquantifiable reasons. In the unfortunate event there is a surprise regarding size, it is important to remember that size is not everything – it still is the house that you paid for.

This article is featured in the August 23rd, 2013 Palo Alto Daily News publication Premier Homes Page 10.


About Author:

Bill Lewis currently serves as Vice President and Manager of the Alain Pinel Realtors Los Altos which has consistently been one of the top producing offices within the company. Bill has over 24 years leading and managing real estate offices in the luxury and upper-end “Mid Peninsula” market. For more information call Alain Pinel Realtors Los Altos at 650-703-1602 or email at blewis@apr.com.
 

(Photo: Flikr/Brian W. Tobin)