Most California real estate Purchase Agreements (CAR or PRDS contracts) are also escrow instructions, that give authority to the escrow company to transfer title when all terms of the Purchase Agreement are met i.e. loan documents are properly signed; all funds are in; Federal or state statutory disclosures such as FIRPTA and Environmental disclosures are properly signed and delivered; the grant deed is properly signed, notarized and recorded; etc.

In northern California, by custom, escrow and title companies are generally the same company, while they are generally different entities in southern California.

Homesellers in California are already familiar with escrow, but homebuyers may not be, particularly if they are relocating from out of state, where closings are sometimes handled by attorneys and all parties “sit down together at the closing table” – this does not happen in California because of escrow procedures.

The California Department of Real Estate has published a Consumers Guide about the escrow process.

Escrow helps protect the parties agains fraud and guides homebuyers and home sellers through the process of transferring clear title to real estate.

The California Department of Corporations scrupulously regulates licensed escrow companies.  Each licensee is required by law to be a member of the Escrow Agents’ Fidelity Corporation, which provides fidelity coverage for member trust accounts in the amount of $5 million.  This fidelity bond guarantees that, in the event of theft of trust accounts, consumer funds are protected.

Escrow processing times are not always exactly the same as stated in the Purchase Agreement if there are complicating conditions that need to be resolved first.

Selection of the Escrow Company is often, but not always made by the home seller or their agent that orders the Preliminary Title Report. Call me if you need a referral to a Realtor or other real estate professional to help you through the process.

Rick Bonetti | APR Referral Network | 408-857-8800 | DRE #01237009

Buyers Market: As the chart above shows, according to Altos Research, Saratoga CA has been a “buyers market” since late 2007.  This means that the rate at which homes are being absorbed (sold) is relatively slow compared with total available inventory.  This market condition is more the case in the upper price range, but there was a good price distribution of Saratoga home sales during 2010 as the detail below shows.  There was actually a hot market for homes within the Saratoga school district in the $1.3-1.5 million price ranges during the Spring, 2010.

Sales Volume: There were 287 homes sold in Saratoga, CA during 2010.  Note: this includes only those homes listed on the Multiple Listing Service and there were a few properties sold, but not listed.  This volume  is up from 2009 and 2008, but lower that previous years prior to the national recession.  The average and median price of Saratoga homes sold during 2010 was actually higher than in 2004.

Price Range: Prices of detached homes actually sold (closed escrow) in 2010 ranged in price from $5.6 million to $456,000.

Inventory : At the start of 2011 there were only 68 detached homes and 8 attached homes listed on the Multiple Listing Service in Saratoga, CA.  This is expected in increase seasonally this Spring.

Distressed Sales: There were only 20 detached homes sold through the MLS that were distressed (Real Estate Owner or Short Sales) – this represents less than 8% of the market!

Days on Market: Many overpriced homes have been on the market quite a while, but for those properties that actually sold (closed escrow) the DOM in 2010 was a reasonable 66 days.

Here is the detail for 2010 detached homes sales (closed escrow) in Saratoga, CA:

Here is the detail for attached homes sold (closed escrow) in Saratoga, CA:

Rick Bonetti | APR Referral Network | 408-8800 | DRE #01237009

Recent media news reports trumpet that sales of existing homes plunged by 29 percent in July 2009.  Is this the whole story… or is this the beginning of election year rhetoric?  Further, do the national statistics have any bearing on how the real estate market is doing locally?

Home Prices Stabilizing – First, let’s put things in perspective. National Association of Realtors Chief Economist Lawrence Yun at his monthly press conference in Washington on August 24, 2010, pointed out that “One of the remarkable things about home sales today is the strength we’re seeing in the national median price.”  He noted a resiliency in prices as a bright spot -  a resiliency due to the equilibrium of prices to household income (including mortgage-payment to income) and the drop in new-home construction. Which is more important – number of sales or home values?

Consumer Confidence – With prices aligned with the economy and interest rates remain historically low (4.42 percent on average), what’s missing is consumer confidence, and that appears to be dependent in part on evidence that jobs are growing.  Elections will be won or lost based on which party is able to communicate best whether we as a nation are gaining or loosing on the job front.  Expect much more negative political media spin on the economy.

Saratoga Real Estate Sales – It is easy, but wrongheaded, to infer that national trends are the same as specific local markets. Take Saratoga, CA 95070 for example, where there were 25 closed detached home sales in July 2010 compared with 27 closed sales during July 2009.  The average sales price of those homes in July 2010 was $1.880 million compared with $1.819 million during July 2009.  Furthermore, those Saratoga sold homes were on the market and average of 44 days for July 2010 compared with 135 days for sold in July 2009!

To bring us even more up to date there were 29 closed sales in August 2010 in Saratoga, CA with an average price of $1.94 million. Hardly a market in decline and crisis!

A Crisis of Confidence – But we still have a crisis of confidence (whose analysis of facts to trust) – whether it be politicians, economists, stock brokers or real estate agents.  Home buyers who just read, watch or hear national real estate trend sound bytes tend to think it is a buyers market everywhere and that things may get worse – which puts them at odds with home sellers who think they are already selling below what their property is worth.

I believe the most astute home buyers are seizing the opportunity to buy a home now at good a value.  It takes careful research and local knowledge.  I try hard to deliver facts and thoughtful interpretation of the local real estate market as I see it and to avoid over-optimistic Realtor spin.  I wish we could trust our media as being unbiased.

What do you read in the tea leaves?

Related articles:

Each county in California has customs as to who pays for closing costs in a real estate sale transaction.  In Santa Clara County it is customary for the seller to pay for escrow charges/fees, title fees (Owners Policy) and County transfer tax of $1.10 per thousand.  Buyer and Seller customarily split the $3.30 per thousand city transfer tax in Mountain View, Palo Alto and San Jose.

Technically these customs and are subject to change, but rarely do.

I am not a foreclosure expert, but I have received training from Alain Pinel Realtors that empowers me to represent buyers of distressed properties.

As I have previously noted on this blog, Saratoga, Monte Sereno and Los Gatos are now experiencing some distressed property sales, but they are generally random (in terms of neighborhoods and price ranges) nor do they dominate most neighborhood markets.

From Google searches I receive phone calls from potential buyers interested in purchasing homes for investment in Saratoga, Monte Sereno and Los Gatos.  In particular, Sunday I received an inquiry from an investor about a home on Saraview Court in Saratoga – it was already scheduled for a trustee foreclosure sale on Tuesday.  It was too late to mobilize for a purchase, but I was curious about the process so I attended the auction and videoed excerpts of the proceedings because I though my readers would be interested.  Perhaps this will help make clear that trustee foreclosures sales are not an easy arena for making a quick buck.  You may choose to focus your search on standard listings or REO (real estate that is already owned by the bank), as these transactions are more likely to close escrow.

In this video you will hear the auctioneer’s clear disclaimers about the condition of a property and the buyer’s lack of assurances of even clear title; cash is king if you want to play this game.

There is a sad and unfortunate story about every distressed property sale. One of the auctioneers Tuesday asked repeatedly not to be photographed (a request I honored), not because he was “wanted by the law”, but presumably because he did not want to be the focus for displaced anger of someone whose home was sold at auction. The Saraview Ct. property is part of an very unseemly tale of the destruction of greed and even murder. This is not genteel real estate.

One point I hope that the video makes clear is that most foreclosure trustee sales are usually redeemed by the second trust deed holder if they think they have sufficient investment to recover.  When the auctioneer said that the property was “sold” on the court house steps for $884,904 ($1 over the opening bid price) this really means that the second TD lender was merely trying to protecting their interest to eventually recover a portion of the amount they had loaned on the property.  The property is still subject to the $1 million encumbrance for the first TD lender!  Even though this property was “sold” to the second trust deed holder the initial first trust deed obligation remains, so the eventual REO list price is likely to be the sum of both, not the “sold” price.

The second point is that the foreclosure process (including attempted short sales) is typically frustratingly long and unpredictable.  The process often extends beyond the three month statutory minimum. The closer an attempted short sale is to the foreclosure date, the less likely it is to close escrow.  Over 100 properties scheduled to sold at auction on Tuesday were canceled or delayed! This video shows just a condensed, edited snapshot of a auction process that took place over 40 minutes.  There were several other private potential bidders there, but were effectively shut off by the second TD lender’s winning bid.  If there were other active bidders it could have taken hours.

Most Realtors don’t plan to make a habit of attending trustee foreclosure sales in the future; I suggest you might not want to do so either.  There are other more effective ways of purchasing a good real estate investment – that’s what I specialize in!

Related articles:

• Trustee Sale vs. Judicial Foreclosure (mortgagesloans.suite101.com)
• Foreclosure – Short Sale – REO – Bank-Owned – What’s the difference? (teachstreet.com)

Short sales, (sales of homes for less than the amount of their outstanding mortgage debt) have tripled since 2008, particularly in California, according to a recent article in the Los Angeles Times.

The number of transactions rose to more than 160,000 in 2009 from roughly 96,000 in 2008, with more than a quarter of the transactions occurring in California.  The increasingly common transactions are projected to rise to 400,000 in 2010, and such sales will likely remain routine as the mortgage industry attempts to stabilize.  As I have stressed before, real estate is very local, so not all markets are effected the same.

Last week I participated in an Alain Pinel Realtors seminar to become certified as a Distressed Property Educated Buyers Agent “ this allows me to represent buyers in purchasing a short sale property, but I have chosen not to represent sellers of such properties as part of my real estate practice.  If you know a seller with this need I can refer you to someone in our company who is Certified in this aspect.

Among the things that were discussed by APR Trainer Jim Pojda for selling agents were:

• Questions to Ask the Listing Agent
• Identifying the Seller Hardship
• Setting Proper Buyer Expectations
• Methods to Help Ensure Lender Package Delivery
• Suggested Contract Items to Protect Your Buyer
• Notice of Default  Investor Buyers’ CAR NODPA Contract
• Items to Review Upon Receiving Short-Sale Approval from the bank
• Forms to Protect Commissions

Real estate agents are licensed under California law in very narrow areas and they are not lawyers nor are they foreclosure advisers.  We may have general knowledge of changes in the law or banking policies affect these transactions, forgiveness of debt, tax law, credit, rehabilitation, or mortgage relief, but it is standard practice to recommend in writing to our clients that they seek out and obtain the advice of competent lawyers, accountants or other licensed professionals with respect to the individual issues which may impact them.

Last summer, 2009 when I took the California Association of Realtors Distressed Properties Training I noted that a local agent active in short sales said that “probably only 10% of short sales actually close escrow!”  Last Friday I asked Jim Podja whether the percentage has improved since 2009 and he said “it has because both banks and real estate agent are now more experienced in the short sale process, but he did not have an updated percentage estimate. There is still a wide variance in practices among various banks/investors and agents.

Alain Pinel is a leader in training its agents about the nuances of distressed property sales; unfortunately, there are still too many licensed agents working for smaller brokerages who do not have either training or experience.  Call me if you need help with your real estate transaction.

I love interactive maps and potential homebuyers can get lots of important information online at the official Los Gatos City website about property they are considering purchasing.  You can search by street address or assessors parcel number and get maps showing topography, zoning, general plan designation, buildings, lot size and more – even street sweeping schedules!  Check it out.

(PS: You have to used Internet Explorer and download a MapGuide Viewer).

New listings: 10
List price decreases: 3
Pending contingent sales: 6
Sale pending: 4
Closed escrows: 2

Earlier, the mid-upper market priced from $2-3 million was slow, but this reversed this past week with several new pending sales in that price bracket. The highest priced new pending sale is a property on Maude Ave. at $2.9 million, which was been on the market 281 days before finding a buyer.  On the other hand, a nearby home on Quito Road, priced at $2.4 million sold in 9 days and a newer home on a nearly half acre lot on Juniper Lane, listed at $2.6 million was only on the market 13 days!  A $2.7 million priced property on Chester also was sold this past week after dropping the price $155,000.  In addition, two Golden Triangle homes (Twain Ct and Argonaut Dr.) went sale pending as did one on Williams near Saratoga village.

Inventory - Ten new properties were added to the inventory of available single family homes for sale in Saratoga leaving the totla currently 137, which is significantly below last year at this time.

Rick Bonetti | Alain Pinel Realtors | 408-857-8800

The low end of the distressed market in Silicon Valley has been more impacted by general decline in market values of comparable homes.  Saratoga distressed properties are more diverse and range from $2.295 million down to $399K. Most of the Saratoga foreclosures are the result of adjustable rate mortgages notes coming due without potential for refinancing.

The shadow market of properties not yet on the MLS (as identified by Matrix) shows 17 total REO in Saratoga, plus 24 in preforeclosure status.  8 homes are scheduled for auction in Saratoga, CA in August 2010.  A summary list of these properties shows the the status, address, foreclosure recording date, scheduled sale/auction date and type of mortgage; additional detail information is available by calling me.

Rick Bonetti | Alain Pinel Realtors | 408-857-8800

This past week I was immersed in three conferences for real estate professionals in San Francisco – all of which included discussions of blogging.  I spent the morning of July 12th at Inman’s Agent Reboot and Monday afternoon at REBarCamp.

• Agent Reboot was designed to bring real estate agents and brokers up to speed about social media – blogging, Facebook, Twitter, etc.
• REBarCamp is an “un-conference” gathering, were social media and blogging experts interacted with each other more informally.
• Inman Real Estate Connect , held July 13-15, 2010 was geared to real estate brokers, marketing directors and technology people.

Engagement -The word that stood out to me at all three venues was engagement – the word applies to Facebook, blogging, corporate websites, home search, mobile technology and was even reflected  in the different format styles of the conferences.

Gone are the days of personal agent branding, static agent billboard websites, and push marketing.  Consumers are less interested today in an agent’s self promotion; the younger your clients, the more this applies.

Today’s Realtors need to learn the art of engaging friends and clients in a more friendly, indirect ways.  Consumers are turning off to one-way broadcast efforts in favor of two-way conversations.

I thoroughly enjoyed engaging with leading edge social media, real estate technology and management experts; here are some overall highlights and impressions from last week:

• Facebook- Usage of Facebook now exceeds Google searches with 540 million unique visitors per month and 570 billion page views per month.  It is a media for lightweight engagement – casual, social, episodic contact, not for pitching listings!  Likes, shares and comments are three primary ways people engage with content posts, pages, photos, etc. on Facebook.  EdgeRank gauges how people interact with a piece of content; engagement is what places posts in the Top News feed rather than the broader Most Recent feed.
• Twitter – This short (130 character) communication is where people inspire, share, educate and entertain their followers.  This too is about engagement rather than pitching your listings.
• Blogging – Yesterday I posted about the future of real estate blogging.  Again the theme is engagement.  Encouraging engagement is akin to the practice of not moderating blog comments before they are published (managing the risk of not being able to control with the benefits of serendipity).  As a sidebar, a REBarCamp blogger noted that she needed to regain her voice, having been overly influenced by the voice of others preoccupied with the task of managing risk ; she knew that a more free expression of her opinions would makes for more lively conversation and engagement.
• HyperLocal - With geo-coded, locational smartphone apps such as Yelp, FourSquare, Gowalla and blog/website apps such as SpatialMatch, there was a strong emphasis on Hyperlocal.
• Websites - Brokers engage visitors primarily by home search engines, market valuation, financing and relocation.  The trend is toward lifestyle and hyper-local search criteria.
• Mobile - Smartphone technology, particularly the IPhone, IPad and other technology solutions currently in design have already changed and will further change the way we engage with the web, other devices and each other.

Engagement at the Conferences- equally interesting to me was the format/style of engagement of the three events, which themselves are a metaphor for shifts in relationship between clients and real estate professionals.

• Agent Reboot and REBarCamp – The first day I was struck by the contrast between a polished performance (putting your best foot forward, marketing approach) and the very casual, social, interactive engagement that springs from online and personal face-to-face authenticity, vulnerability and honesty.  Many of us sort of knew people online, but had yet to meet face to face and interact on another level.  Polished marketing still has its place, but today’s consumers are short on trust and like to get to know with whom they are going to doing business.  The internet is now often the first point of contact.  Friends of friends expands our sphere.
• Un-programmed Programing- The main Inman conference started out with Brad Inman’s rambling interview of Craig Newmark, which had a semi-planned  interruptions by audacious text message questions from the audience projected on the screen behind the speaker and an unplanned  confronting member of the audience (upset about politics and the continuing poor state of our economy). To his credit, Brad seemed to enjoy the sparks and candid confrontation of his friend Craig and rewarded the audacity rather than squelched it.  This engagement added spice, but was not comfortable for control freaks.
• Broad range of speakers and attendees -the Inman conference successfully brought together contrasting groups of people to engage with each other (brokers, marketing professionals, technology experts, entrepreneurs and vendors, but only a few agents like myself).  There were the:
  • casual, friendly, open, young entrepreneurs who boldly experiment with breakthrough technology to engage people and make them loyal clients and evangelists to grow their business on their behalf
  • hip, youthfully exuberant brokers with panache – brashly making end run touch-downs around sleeping corporate giant real estate firms
  • leaders of some presumed stogy institution, who gave wonderful and surprising visionary riffs
  • supremely professional, thoughtful and well prepared corporate strategists
  • very young  techies in T shirts and hoodies, somewhat awkwardly nerdy, but brilliant and articulate
  • well groomed, pin-stripped, stylishly trendy and slick
  • those representing a very focused and well disciplined but cold lead machine mentality – it’s all about numbers: lead generation, capture and conversion
  • vendors with thinly veiled, self-serving sales pitches for their technology system and training

What was thankfully missing from Real Estate Connect?

• preoccupation with the continuing problems of foreclosures and short sales
• doom and gloom about persistent lagging recovery in employment

Other take-away buzz words from the conference are: HyperLocal, Mobile, Social, Real-Time, Community, Apps, Maps, HTML5, Curation, Consolidation, Integration…

Orchestrating a successful real estate conference must be like the fine art of using a chef’s recipe: having the right ingredients in the right proportions and sufficient spices (not too much so that the dishes are overpowered) to make the memorable dining experiences – managing chaos and encouraging serendipity.

Managing a creative and productive real estate office must be somewhat like herding cats  (who don’t know if they want to be outside or inside) with very different personalities and skill set , but are lovable all the same and we would not choose to live without them.

Attracting friends who may become clients involves taking risks and engaging by authentically revealing your personality in such a way that others will grow to know you  and trust you.

What do you think?  Leave a comment.  Engage in the conversation.

Rick Bonetti  | APR Referral Network | 408-857-8800 | DRE#01237009