Get Your Money’s Worth, Don’t Overpay

A recent listing agent sent out this message: “Seller says, ‘throw in the boat.’ Currently listed with a boat broker for thirty-eight thousand dollars, this makes a beautiful home even more enticing.”

Speaking of incentives and sellers paying a buyer’s loan points, “you shouldn’t pay more than a property is worth” in order to get a credit from the seller. A recent Department of Real Estate Bulletin was titled, “Beware of price inflation transactions.” They are concerned that there have been a number of purchase offers that significantly exceeded the listing price. “These purchase offers specify that the amount offered over the listing price be refunded to the buyer or to a third party at the close of escrow,” the bulletin writes. (In escrow this third party is sometimes described as a repairman.) It also states that “there is not a specific provision in the Real Estate Law that prohibits” this, but it is concerned about lender fraud. A specious argument might be that the lender protects himself by either hiring or sending out an in-house appraiser (which the buyer pays for) to ensure that the property’s value and purchase price is in line. “Caveat Lender?” However, if a real estate licensee participates in these transactions (examples were $70,000 to $100,000 over the listing price) they may face disciplinary action based on general statutes. Appraisers could be on the hook as well. Buyers and sellers are not exempt from defrauding a lender either. The answer is to disclose everything – in writing.

The Public Good?

Proposition 90 is on the ballot for November 7. An informative interview with a staff attorney at the Pacific Legal Foundation (www.pacificlegal.org) will be up on my website soon (www.RadioRealEstate.com) that deals with this voting measure. Currently, there is an interview with Peter Schrag, a Sacramento Bee columnist who opposes Prop 90.

The proposition deals with eminent domain and California politicians wanting to avoid an issue like the Kelo v. New London, Connecticut Supreme Court decision that found in favor of the City and not the homeowner. This paved the way to demolish the homes and make way for big development. The shocker was that, although the decision was deemed to be for the ‘public good,’ the government was turning homes over to private developers. Proponents of Prop 90 want to protect private property rights and ‘mom and pop.’ Opponents suggest that it will benefit ‘slum lords,’ will overcompensate people for their land and is a sledgehammer to install a pushpin. It might not be perfect but I’m voting for it. You should too or your property might be declared ‘blight’ and become a shopping mall.

MLS Update

I have tracked the number of single family listings available that have been on the market at least 120 days. On September 8, there were 118 and it dropped each week for the following four weeks to end up at 100. I’d like to think that this occurred because they all sold but I don’t know that for a fact. Overall, the number of listings has also dropped after steadily increasing from 2005. On May 5, we went above 500 for active listings. On August 25, we hit a high of 656 and now we’re approaching going below 600 again. The number of pending sales for the four weeks of September was a respectable number, higher than the weekly year-to-date closed sales. However, the closed sales were lower than the year-to-date average during that same period. This is just single family residences and just through the Multiple Listing Service. The number of listings on the October 5 Santa Barbara caravan (agent’s open houses) totaled only 52. Recently, for weeks on end it was not uncommon to see 80 to 90 listings for the same caravan. Fewer inventories would ultimately help sellers but we need to go a lot lower for that to happen. Although I do encourage you to invest in real estate, remember what Henry David Thoreau said: “Goodness is the only investment that never fails.”

Rental Update

Sixty-Day Notice is back. Governor Arnold Schwarzenegger signed a bill (opposed by the California Apartment Association) effective January 1, 2007 requiring landlords to give 60-day eviction notices to tenants who have resided in their rentals for more than one year. Most interestingly, the one-year clock re-starts if a new tenant (a roommate) is added to the lease. At first glance it seems fair to agree with Schwarzenegger’s comments: “Being asked to move involuntarily is never easy and moving is especially difficult for the elderly and persons with disabilities.”

A local example and a possible affront to the new bill is what happened to the 50-plus tenants given 30-day notices in Isle Vista. If I can paraphrase, local property manager Ron Wolfe, who spoke on this subject in a recent interview (also available on my website) said most landlords look to keep good tenants. When a problem tenant arises, it benefits the surrounding good tenants to remove the bad apple as soon as possible. Landlords are in the business of keeping tenants, not giving them notice to move.

Home Maintenance Tip

This is from the helpful folks at the Goleta Water District. For you do-it-yourselfers, attach a plastic bag filled with vinegar and wrap it around a corroded faucet. Let it sit overnight or longer. This works to make it look good, run smoother or makes it easier to remove without snapping the shower arm, which I did recently prior to learning of this tip. Actually I knew of this at one time but forgot it. As Steven Wright says, “You can’t have everything; where would you put it?”