fbpx
No Comments

Napa Valley Investment & Vacation Home Markets Waking Up!

The investment- and vacation-home markets in Napa Valley, St.Helena & Calistoga have been among the first to show signs of real estate resurgence, according to the people who keep track of such things (as usual, the National Association of Realtors® is one). A second home can be a vehicle to generate investment income.Or it might be the fulfillment of a long-held dream.  St. Helena just passed a law to legalize short term rentals this past March 2012. Read more here.

It might seem unlikely, given the general view that the housing sector continues to post mixed signs of recovery. But when you think about it, there are reasons why it could make perfect sense. A few that come to mind:

 

* The price is right. If the overall real estate market is in fact in the process of rebounding, it’s still so early that no one can be certain it will be strong — or even that it will continue. You couldn’t describe a more appealing situation for small investors who have been biding their time, waiting for the right bargain to pounce upon. Investment home prices rose 6.4% last year (of course, because rents were rising), yet the median vacation-home price was down over 19%! Talk about vacation bargains! All of a sudden, the daydream of affordable vineyard homes in the Napa Valley for sale seem to have become a reality.

 

* The market is open. Right now, there are also strong inventories of vacation and Napa houses for sale – many of them located in attractive settings. Many of those settings also happen to be the very places were the real estate market is still digging out from under the foreclosure mess. This makes it easy for people to find vacation- or investment-home opportunities that previously would have been out of their price range.

 

* Interest rates are low. Low interest rates make a second mortgage even more affordable for those seeking a Napa Valley luxury vacation home.  Today’s interest rates signal savings throughout the term of the loan, which is even more appealing for those seeking a second home. Combined with the sheer volume of Napa homes for sale, this makes it the ideal time to purchase a Napa dream vacation or retirement home.

 

*Optimism on the rise. When the wolf is at the door, few of us are tempted to make luxury purchases. And for years, it seemed like the only news about the economy was bad. But declining unemployment numbers, soaring stock markets, and the resulting good news for retirement accounts can change attitudes…the same attitudes that underlie investment decisions of every kind.

 

Contact me if you need help finding that dream home

-Karen Magliocco

 

No Comments

Napa Real Estate Homeowners Should Track This One. Banks with a heart?

3 weeks ago, Bank of America initiated a pilot program allowing homeowners facing foreclosure to remain in their homes as renters. There are important reasons why Napa Valley homeowners should be interested in the success or failure of BoA’s approach.

First, a note about the term “bank owned homes”. It’s not technically correct to say that there has been some huge rise in the number of them, because “bank owned homes” actually describes every home with a mortgage. The mortgage holder always technically “owns” the property, even when the homeowner retains title. However, what is true is that over the last four years, many homeowners learned the hard way just what it means to face the reality of your home being owned by someone else.

Enter Bank of America. Their press release quotes Ron Sturzenegger, a Legacy Asset Servicing executive with the Bank: “Our priority is designing a solution that helps our customer.” Although we might be justifiably skeptical of this as BoA’s sole motive, allowing homeowners to remain as renters in bank owned homes is hardly just a PR move.

The program certainly makes bottom-line financial sense for a whole host of parties, including Napa Valley real estate homeowners who have no difficulty meeting their own mortgage payments.

Under the program, a former homeowner who qualified would be able to continue working and contributing to the economy without the costs, loss of time, and anxiety involved in moving. For all property owners, the ultimate effect is to keep the market from being flooded with distress sales. Every neighborhood would benefit if home values stabilize.

Under the pilot model, bank owned homes convert to investor ownership in a much smoother transition than the foreclosure/short sale model. Instead of the lender being left with an empty property generating zero revenue in the interim, former homeowners simply become renters, making it easier for them to get back on their feet financially.

In my opinion, any move or policy that helps more people stay in homes is a policy worth discussing. BoA’s program is only in a limited test stage, but here in Napa we can hope that it will prove to have multiple beneficiaries: banks, investors, agents, homeowners and neighbors. Everyone benefits when his or her neighborhood’s real estate market is healthy!

Have a question about real estate in Napa Valley? Feel free to contact me anytime with questions. I represent Napa buyers and sellers, and am always available to chat about your own plans.

-Karen Magliocco

No Comments

Why “For Sale by Owner” Signs Cost A Bundle

When the time comes to list your Napa home for sale, it can be tempting to stick one of those “for sale by owner” signs in your lawn and just try to sell it yourself. Daydream visions of trips to Europe, new Lamborghinis and stacks of gold ingots (all bought with the commission fees saved) can crowd out more realistic thoughts.

Images of craven real estate agents, twirling their mustachios as they plot to under-price your home, may compete with more practical notions… such as the actual hassle of learning to deal in a specialized marketplace without specialized tools and resources.

Still, it is tempting. After all, at the local Napa Home Depot “For Sale by Owner” signs cost just $8.99 at any hardware store! And how hard could it be to find out what forms you’re supposed to use to accept a good faith deposit? Or where to put the deposit so it’s in escrow (or whatever they call it)…???

The fact is, about 70% of homeowners who try to sell their homes themselves eventually hire an agent. Some of the others give up altogether — having now established a record of owning a house they didn’t sell.

So it’s probably more practical to forget the Lamborghini, right? Well, maybe not entirely. According to the National Association of Realtors, represented sellers get higher prices for their homes than do owners of comparable homes who eventually complete a sale. Often, the difference in price is more than enough to cover the broker’s fees.

Marketing your home is only part of my job. Things really swing into gear once a prospective buyer makes an offer. That offer includes more than an offering price: it also establishes how the buyer wants to structure the deal and sets forth a timeline. It’s really difficult for a homeowner to evaluate the offer and the possible consequences of each term in the contract. As a result, it is also very difficult for the seller to negotiate the offer to his best advantage. I will make sure you understand the offer and its implications — and keep you from making a costly mistake.

A lot happens between your acceptance of the offer and closing day. The buyer usually orders numerous inspections and, depending on the results, may request repairs. These requests often lead to further negotiations. If the buyer isn’t satisfied, your deal can fall apart. And a deal can collapse over financing and title delays. It’s a stressful, emotional time for the buyer and seller both.

From the moment you sign your listing agreement, I am legally and ethically bound to work in your best interest and to ensure that your sale is as profitable as possible. If you’re considering selling your home, before you decide to just stick one of those Napa Home Depot “For Sale By Owner” signs in your lawn, contact me for a complimentary consultation to see how I can help you succeed!

-Karen Magliocco

No Comments

Napa Foreclosure Sales Flood Market

Foreclosures and other distressed properties account for more than a third of all home sales, and data released today suggests that figure may soon grow even bigger.

Lenders in January took back nearly 91,100 distressed properties, which includes foreclosures and short sales, up 29% from the previous month, according to data released this morning by LPS Applied Analytics, which tracks mortgage performance.  In the next few months, experts say those homes will make their way back to the market to join the already high percentage of distressed homes being snatched up by buyers.

That addition of distressed properties will likely lead to further drops in home prices, says Tom Popik, research director at Campbell Surveys, a real estate research firm. Foreclosures and short sales accounted for roughly 35% of total existing home sales in January — up 16% from June, according to the National Association of Realtors. Over that period, the median home price fell 8.5% to $154,700. “Prices are going to continue to go down for a long time,” says Popik

To be sure, distressed properties tend to make up a greater share of overall sales in the winter when investors are the predominant buyers, says Walter Molony, a spokesman for the National Association of Realtors. Families typically purchase a home in the spring and summer before the new school year begins. And because families tend to avoid buying foreclosures, distressed properties make up a smaller market share of home sales during that time, he says.

Still, as banks reclaim more foreclosed properties and put them back on the market, experts say homeowners are likely to feel the impact of a nearby foreclosure on their own property’s value. On average, home property values drop about 1% when they’re within one-eighth of a mile from a residence that’s received a foreclosure filing, according to the Woodstock Institute, which researches foreclosures, and the Georgia Institute of Technology. When the home is sold – whether in an auction or taken back by the lender – homes within a quarter mile lose up to around 4% of their value, which they’ll need between two and five years to recoup, according to a separate study in the Journal of Real Estate Finance and Economics.

For homeowners, more foreclosure sales in their neighborhood can lead to losing home equity at a time when millions already owe more on their home than it’s worth. Less equity will make it harder to borrow against homes for renovations, repairs, or other purposes, says Spencer Cowan, vice president at the Woodstock Institute.

Real estate pros say those who want to sell will likely end up getting less for their property than they expected. That’s because they’ll be competing with foreclosed homes that sell at a roughly 29% discount on average, according to RealtyTrac.com. Of course, these homes may stand out to buyers who prefer to buy a move-in ready home or at least one that doesn’t require extensive repairs like most foreclosures do.

What’s bad news for sellers, of course, is good news for buyers. In particular, experts say the spike in foreclosures means buyers have more leverage to negotiate a price on a non-distressed sale if it’s in a market where a significant number of homes are in foreclosure. They may also be able to purchase a foreclosed home at a relatively low price (though they’ll likely have to pump money into it for repairs).

During the last quarter of 2011, foreclosure sales in Las Vegas accounted for 59% of all home sales – among the highest in the country — according to RealtyTrac.com. Those homes sold for an average discount of 19%. In Sacramento, foreclosures made up 50% of all sales and sold at a 25% discount. But while they may get a deal, buyers shouldn’t count on turning a profit quickly especially if foreclosures continue to rise in the area dragging property prices further down.

No Comments

Napa Valley Real Estate Q&A : Winter 2012

Q: I’m buying a house and my agent says that the seller wants me to remove my contingencies. How do I do that?

A: Most real estate contracts contain numerous contingencies, mostly in favor of the buyer, revolving around things like investigation of the property condition and obtaining financing for the purchase. If the buyer is unable to obtain financing or disapproves of the condition of the property, then the buyer can usually cancel the purchase agreement without penalty and have their good faith deposit returned. If, on the other hand, the buyer is satisfied with the property condition or has received final loan approval, then the buyer acts to remove these contingencies so that they can no longer be claimed as a reason to cancel the contract. How you do this depends on the terms of the contingency removal provisions in your contract.

There are two general ways that contracts provide for contingency removal: active removal and passive removal. With the active method the contingency period usually stays open (even if the stated time period has lapsed) until the buyer removes the contingency in writing or the seller provides the buyer with a written notice to perform (the CAR purchase agreement provides for this method). With the passive method the contingency is deemed removed when the contingency period lapses unless the buyer objects or cancels the contract prior to the lapse (this is the usual method provided for in REO agreements). So one method of removal requires an affirmative act and the other does not. It is essential that you read your purchase agreement and consult with your agent to determine which method applies in your situation.

Call Karen Magliocco of Coldwell Banker Napa Valley  (707) 249-1600  with your real estate questions.

 

Q: I negotiated a 3% closing cost credit from the seller and want to know what closing costs can be covered by the credit?

A: A closing cost can be used for all recurring (interest, taxes and insurance) and nonrecurring (i.e: appraisal, title and escrow) closing costs associated with the purchase of your property. If the actual closing costs are less than the seller credit, the subject credit will be reduced to the amount of the true closing cost.

For answers to your questions about home loans, contact Mortgage Solutions, Inc., (707) 259-5272.

 

Q: I just received an offer on my house and the buyer is requesting that I fill out a new Transfer Disclosure Statement (TDS) even though I have already filled one out. Why can’t we use the TDS that I filled out when I put my house on the market?

A: State Senate Bill 837, which was signed into law last year, mandated some changes in the TDS that took effect on January 1, 2012. Real property sales which close escrow after the effective date should use the newly revised form. The revisions include a checkbox for a seller to disclose whether the property has water-conserving plumbing fixtures such as low-flow toilets, shower heads and faucets. The revision also informs the buyer that by January 1, 2017, a single family residence built on or before January 1, 1994, must generally be equipped with water-conserving plumbing fixtures. Further, if the residence is altered or improved on or after January 1, 2014, the installation of waterconserving plumbing fixtures must be a condition of final permit approval. I suggest that you double check with your listing agent to determine whether you have completed the revised form and whether the buyer’s request that you fill out a new TDS stems from this change in the law.

Call Karen Magliocco of Coldwell Banker Napa Valley  (707) 249-1600  with your real estate questions.

Q: Are there any government aided programs to help first time homebuyers’ in Napa?

A: Both Napa County and The City of Napa have homebuyer assistance programs for qualified buyers. The programs can vary depending on the availability of funds. We suggest you contact the County and Napa housing divisions directly regarding the qualification requirements and current availability of funds. If you are interested in attending a seminar regarding the homebuyer’s assistance programs, Coldwell Banker Brokers of the Valley will be hosting a seminar featuring both The City of Napa and the County’s housing departments on Wednesday, March 7th at 7:00pm at our Napa office located at 1775 Lincoln Avenue. For more information, please call    (707) 249-1600     or visit www.silverado-property.com

Call Karen Magliocco of Coldwell Banker Napa Valley  (707) 249-1600  with your real estate questions.

 

Q: When I sell my home I don’t want to be responsible to the buyer for any repairs. How do I sell my property “As-Is”?

A: You can certainly sell your property As-Is but there are a number of qualifications and pitfalls that you need to be aware of. The term “As-Is” is normally used to denote the purchase of a property in its present physical condition with no liability on the part of the seller to make repairs or upgrades to the property as a condition of the sale. However it all depends on how your contract reads.

Not all purchase agreements are created equal. For example the California Association of Realtors purchase agreement provides that the property is to be sold in its present physical condition, but another publisher’s standard purchase agreement states that the seller agrees to deliver the property with its major systems (e.g. electrical, plumbing) in working order, its roof free of leaks and all windows and shower enclosures in good repair. In the latter case you would need to use an As-Is addendum to the purchase agreement.

Even if you have an As-Is agreement, the purchase contract will usually provide the buyer with the right to investigate the condition of the property as a contingency of the purchase. Further the seller must disclose known defects, maintain the property during escrow, and California law obliges sellers to attend to certain items such as smoke detectors and water heaters. Therefore it is important to consult with a real estate professional or legal counsel to insure that your purchase agreement meets your needs and that you are complying with relevant laws.

Call Karen Magliocco of Coldwell Banker Napa Valley  (707) 249-1600  with your real estate questions.

 

Q: We read that the government once again adjusted FHA and VA limits for Napa County, could you please comment on the changes?

A: Congress did indeed recently pass legislation that adjusted both FHA and VA loan limits throughout Napa County. For a single family residence, the new FHA loan limit in Napa County is $729,750 through December 31, 2013. In regards to VA loans, the loan limit for the Napa County was decreased from $530,000 to $460,000, effective January 1, 2012.

Call Karen Magliocco of Coldwell Banker Napa Valley  (707) 249-1600  with your real estate questions.  .

Q: I have been trying to buy a home and find myself in many multiple offer situations. How can I be sure that the terms of my offer aren’t divulged to my competitors?

A: While your agent, as your fiduciary, probably has a duty to keep confidential the terms of your offer except as necessary to present your offer to the seller, the seller and the seller’s agent usually do not owe you the same duty of confidentiality. In other words, the seller can shop your offer. Policies differ from broker to broker on how this sensitive issue is handled, so before you write your offer make sure that your agent determines what the listing broker’s policy will be regarding the confidentiality of your offered terms. You also may consider requiring the seller and seller’s agent to sign a confidentiality agreement with you prior to presenting your offer. The California Association of Realtors prints a simple confidentiality agreement which prohibits all parties from disclosing the price and terms of an offer (and even the buyer’s name) to anyone else prior to, during the pendency of, or after completion of the transaction except as required by law or MLS rules. If you plan on using a confidentiality agreement, make sure it is signed by the seller and seller’s agent before the offer is presented.

Call Karen Magliocco of Coldwell Banker Napa Valley  (707) 249-1600  with your real estate questions.

Q: How do the new loan limits affect our potential purchase of a home?

A: Effective October 1, 2011, FHA reduced the maximum FHA loan limits from $729,270 to $592,250. Therefore, assuming that you elect to put down the minimum FHA required down payment of 3.5%, the maximum sales price using FHA financing in Napa County would be $613,730. Be advised that a borrower can always elect to increase their down payment and purchase a home in excess of the aforementioned figure.

Call Karen Magliocco of Coldwell Banker Napa Valley  (707) 249-1600  with your real estate questions.

No Comments

St Helena Real Estate Vacation Homes

ST. HELENA — Short-term rentals that have flown under the radar for years soon will be able to operate legally, with the St. Helena City Council voting 4-1 this week to approve new regulations allowing city staff to issue up to 25 vacation rental permits.

The permits will be available on a first-come, first-served basis, but they won’t be available right away. The council will have to formally adopt the new ordinance at its April 10 meeting, followed by a 30-day period before it takes effect. City staff will announce when permit applications will be accepted.

The city started looking at the issue last year, after operators of legal bed-and-breakfasts complained that illegal operations were doing business without paying applicable taxes. Given the choice of cracking down on vacation rentals or strictly regulating them, the council chose the latter option.

“We’ve had this problem in our city for a long time, and this is a very good ordinance to address that problem and also raise more revenue for our city,” said Councilmember Peter White.

Councilmember Catarina Sanchez cast the sole dissenting vote. She said the regulations would take 25 units out of the city’s housing stock, drive up housing prices, and “affect the culture of our community” by allowing commercial enterprise in residential neighborhoods.

That last concern was echoed by Diane Dillon, a member of the Napa County Board of Supervisors who said she was speaking as a St. Helena citizen, not a supervisor.

“I’m concerned that this is a significant change for the city of St. Helena to allow more commercial uses in residential areas,” Dillon said. “That’s a little bit of a sea change there, and I have concerns that the residents of St. Helena might not really understand the full impacts of this.”

Dillon also brought to the city’s attention that only operations offering four rooms or more are subject to the countywide 2-percent assessment for the Tourism Improvement District, so the ordinance can’t force vacation rentals to pay that assessment. The city changed the ordinance so it only requires vacation rentals to pay the 12-percent Transient Occupancy Tax.

City councilmembers said they’ll revisit the ordinance in a year to see how it’s working. Applicants who obtain a permit during the first year will have to abide by any changes the council deems necessary after their review.

The Planning Commission spent hours mulling the details of the ordinance. The council kept some of the commission’s recommendations, but made a few changes.

One change involved how neighbors are involved in the initial application process. The Planning Commission recommended that applicants should get the written approval of 70 percent of their neighbors — anything lower than that threshold would trigger a hearing before the commission.

But the council decided to go with their original scheme: a Planning Commission hearing will only be required if 30 percent of neighbors object to the application.

Applicants will also have to give neighbors contact information for someone who can respond to complaints within 30 minutes.