At the start of any new adventure fear and uncertainly always impacts important decisions.  FEAR = False Evidence Appearing Real!  We are in the midst of a BIG real estate adventure in the East Bay - the Economy!

This phrase, “Do not be fearful,” is one that I have not only used as a Realtor, but also as a life long sailor.  It is the phrase that is used by those “staying behind” to those who are about to embark on their next adventure. My experience with this mantra is based on the fact that no one actually knows what will happen during the adventure. Those who are “staying behind” actually don’t care, even though they may be highly impacted by the events of the adventure.  Are you getting the drift of my analogy with this scene I am outlining? The one constant is that there many times the majority becomes paralyzed from participating in the next “adventure”, and there are very few who can’t wait for the next “adventure”.  I am one of those who embrace any adventure that shows up.  And…the realities of what is happening economically in our corridor is a daunting moment regarding real estate.  I am still convinced that one of the BIG issues in today’s real estate market is FEAR that is still causing Buyers to hesitate.  Wake up, interest rates are going to rise this year. How long are Buyers going to be in denial about this?

Here are some of the National realities regarding the impact of FEAR today on East Bay real estate Buyers and Sellers.  When property prices fall homeowners feel poorer, which then causes them to spend less, and sometimes save more.  GDP - gross domestic product, falls and unemployment increases.  A decline of 25% in home prices nationally, would strip out $5 trillion in household wealth.  In addition, this is a similar amount that was lost by consumers when the high-tech stocks collapsed in 2000 to 2001.  In some parts of the country there will be home prices that fall even further than where they are today! ( My personal opinion about our micro-economy is that we are in Disneyland regarding our real estate values compared to most every other market in the U.S.  Sales are up the first two months of 2008 and the inventory has shrunk by almost 20% since January 1, 2008!)

The realities are, even though the East Bay real estate markets are in much better shape than anywhere else in the country, people in the East Bay still read the Wall Street Journal and the New York Times - neither of which have any information that is relevant to the East Bay real estate markets.  FEAR is the real deal in our real estate markets. The reason why people are willing to plow through their fears and participate in their next adventures is because they have the information and experience to understand the realities of the “adventure” they are about to embark upon, and they step on board the sailboat and set sail.

Those who clearly understand the East Bay real estate markets -  factors that are impacting interest rates, plus reviewing the home sales during the last three months, will discover that this is the BEST moment to purchase real estate - whether as their next home, or as an investor.  All of the factors that are impacting gas prices, mortgage rates, the falling U.S. dollar, and many more issues, are not events to cause paralysis.  They are events to study, clearly understand, and then act - not stand on the shore wishing they could visit distant lands.  I have lived in the East Bay since 1970 and have seen many ups and downs in real estate prices and several recessions.  It is in my self-interest to make great financial decisions.  Today my advice to those who will listen is BUY!  I welcome your opinions about my thoughts of the current condition of East Bay real estate.  Again, my point is that you can never explore new shores by standing on the dock wishing you could get their - “Do not be fearful!”  Until next time…

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For the first two months of 2008, there is a dramatic increase in home sales!

If Buyers are awaiting the “bottom” to hit the real estate markets in the Tri-Valley and San Ramon Valley, they may have waited two months too long!  Again, remember that all real estate is a local economy, and in some cases actually a micro-economy. There are not only differences within regions of the East Bay real estate markets, there are even micro-economies within zip codes.  What we are noticing is a dramatic increase in opened escrows in the Tri-Valley and the San Ramon Valley!

The real estate reporting firm for the Bay Area is DataQuick. Their statistics for the first two months of 2008 show an increase in sales in all but a very few communities in the East Bay real estate markets! Plus, the median home prices have also increased. One of the most dramatic increases have occurred in Pleasanton with a 128% jump in opened escrows compared the first two months of 2007. “Most encouraging are that the increases we found in units sold, pending sales, and median prices have occurred throughout the southern and eastern portions of the two East Bay counties, and are not limited to the traditionally stronger geographic markets,” said Melrose Forde, the 2008 president of the Bay East Association Of Realtors. “Traditionally, real estate sales activity is seasonal. These market statistics show that we’re moving out of the slow Winter months into the more active buying and selling seasons,” Forde said.

It is obviously too early to see if this is a trend in the East Bay real estate world, but it again demonstrates that the generalizations that are made in the media regarding real estate sales are not the basis a Buyer is to use for their buying decisions.  Remember, all real estate markets are “local economies”.  Another factor that is going to be a key factor is mortgage interest rates.  With the Fed’s interest rate reductions last week in the short term lending world, it will not have a direct effect on consumer mortgage rates. It does have an impact on consumer confidence. And, with the fears of  inflation still lingering, it is expected that interest rates may even rise by one percent by the end of the year because of the inflation factor.

So, the Buyers who are waiting for the “bottom” may want to notice that it may be already here. And, if they want to get the best mortgage rate of the year, today is the day to buy a home in the East Bay real estate markets! Even Sellers need to pay attention to becoming Buyers as soon as possible, so they do not miss out on the real estate opportunities that are currently present. Contact me if you would like to further discuss these trends I am noticing.  Until next time….

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The Fairmont Hotel in San Francisco was the host of this years conference ending March 20^th.

Ragatz Associates is an international consulting and marketing research firm that serves the worldwide resort industry.  It was founded in the 1974 by Dr. Richard Ragatz which has now conducted over 2,000 studies for resort developments in over 70 countries and across the United States.  The company provides two core services to the resort industry - feasibility analyses for resort projects and market research for the potential resort project.  Ragatz Associates focuses on consumer shared-ownership of the resort industry, which includes fractional interests, private residence clubs, destination clubs, and resort timeshares.

For the past eight years, Dr. Ragatz and his team host the annual conference which further explores the world of fractional ownership of resort properties.  This year’s conference was in San Francisco from March 18^th - 20^th.  The “whos who” of the resort property world were attending.  It was my pleasure to spend time at the conference and even have the opportunity to interview two of the conference presenters - Sherman Potvin, president of Luxury Fractional Guide, and Bob Waun, the CEO of Vacation Finance.  The conference agenda covered all aspects of the evolving world of fractional ownership for those seeking part time second homes around the world. A sample of the conference agenda follows;

• Today’s Affluent Consumer
• The developers’ view of the upcoming trends - from the Brand developers, Private Residence Club, and Independent fractional ownership developers.
• Fractionalizing “One-Off” homes - creating a fractional ownership for one residence.
• The external exchange companies
• Structuring the most proper offering of the fractional ownership product.
• The owners benefits and the required ancillary services.
• Critical legal issues in the fractional ownership industry.
• Financing fractionals in today’s wild financial market place.

For a copy of Dr. Ragatz 2008 report click here.  I believe the cost for those who did not attend the conference is $175. Please contact me if you like more information about what Fractional Ownership is about, or, if you are a developer, how you can maximize your return by creating a fractional ownership structure for your resort projects.  Until next time…

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As part of the DBMG’s monthly breakfast, Guy Houston was invited to update the membership on the challenges facing our State government’s current budget issues.

 Our region’s representative to our State legislature, Guy Houston, was the guest speaker at the Diablo Black Men’s Group monthly breakfast in San Ramon today. Mr. Houston gave a brief update on the budget issues facing the State, and then took questions from the audience on a wide range of topics.

Mr. Houston started off with a general description of our Governor taking the position of cutting 10% off of all aspects of the State’s budget to balance the current fiscal crisis.  But, he did expand on what a 10% cut actually means. It actually means 10% off the budget after all of line items are given an inflation increase - meaning that the actual cuts are from 1% to 2%. ( Do not try this same accounting method at home when you trim your monthly budget by 10%. At your home it will actually mean a 10% cut.)

Mr. Houston’s two areas that he aims to protect are schools - K through 12, and infrastructure - our transportion structures. Another challenge with the budget is not only the lowering of revenue, but the increased debt service from the borrowing the State has done over the recent years. This has been in the form of bonds guaranteed by the State that require interest payments. He commented that our State’s income is based on a “boom or bust” annual planning method. Some years there is plenty of income, and some years there is a significant decline. Because of this State revenue cycle, he suggested that there be a broader sales tax implemented in order to smooth out these up and down years of revenue generally based on income taxes.

A solution to our totally inadequate funding of transportation infrastructure would be to set up public/private partnerships for toll roads similar to what Orange County has accomplished in Southern California. He gave the example that in 1970 11% of the State budget was allocated for transportation infrastructure.  Today it is .75% of the budget, which doesn’t even fund the road maintenance that is required. It was an informative presenation and a lively Q&A time.  Mr. Houston will be leaving State government after this term and be a candidate for the Contra Costa Board Of Supervisors.

The breakfast forum was with a group - the DBMG, that was formed in the mid-1990s as an organization of men who wanted to use their collective influence to enhance the lives of their members, families, and their community. Besides a keen focus on providing college scholarships for economically challenged Bay Area youth, they promote awareness of prostate cancer, diabetes, and heart disease to it’s members and the communities they serve.  Please contact me if you would like more information about how to support the Diablo Black Men’s Group and their community projects.  Until next time…

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  ( Carole Rodoni is the past COO of Alain Pinel Realtors and an industry leader with her finger on the pulse of what is happening in the East Bay real estate markets. This is a portion of an interview Jim Walberg conducted with her on March 12, 2008 in Pleasanton, California.)

If you want a STRONG opinion based on years of leadership in Bay Area real estate then speak with Carole Rodoni.  Her “opinions” are greatly valued by the industry because of her years of leadership and because of her constant study of the economy and how it impacts real estate.  Here are some of her remarks regarding the state of the East Bay real estate markets in 2008.

What are the critical topics Buyers need to focus upon regarding when to purchase real estate this year?  The first question a Buyer needs to answer is why they want to buy a home right now. Their answers will determine when and what community they make their real estate purchase. There are always Buyers that need to purchase home right now; Employment changes; Growing family; Changes with elder care; and many more important reasons to purchase a home. The rest of the answers to the topics Buyers need to consider are;

• Tax benefits while owning a home;
• Tax benefits when it sells regarding the capital gains exclusion for a large portion of the gain from the sale;
• Holding the property long enough to enjoy the appreciate that will happen because of purchasing a home in the correct location in the East Bay;
• LOCATION is still the most critical factor when purchasing East Bay real estate; schools, lifestyle, vital employment centers; close to San Francisco, Monterey Peninsula, Tahoe, the wine country, etc.
• Readily available mortgage money at a great interest rate and terms.
• Do not base your Buying decisions on what your read in the newspapers or hear on various media sources.  Every market is a micro-economy about which it is impossible to generalize. What is happening in Brentwood and Antioch is much different than what is happening in the Alamo or Danville real estate markets.

What should Sellers focus on in a Buyer’s market?  There are four critical factors for Sellers to consider;

• Why do they need to sell their home now? If you have to sell, you obviously don’t have a choice. But, if you don’t have to sell, the Seller may want to wait a year or so.
• If they need or want to sell now they need to evaluate what they have accomplished financially by owning their current home; appreciation, tax benefits, and be satisfied with those benefits and get over the fact they may not make a killing on the price of their home.
• Price their home as to what it will be worth in two to three months from now, and get it sold FAST.
• Become a Buyer ASAP! The Seller will be able to get similar values with the next home they purchase as a Buyer did with their home. Plus, there are areas of the East Bay where homes are still going up in value and multiple offers are the norm. Again, East Bay real estate is made up of many very diverse micro-economies.

What advise is Ms. Rodoni giving Realtors who are reading and listening to her remarks about how to thrive in the 2008 East Bay real estate markets?  Besides advising Realtors to create value for their customers, lead with revenue, and demonstrate how to create wealth, Ms. Rodoni had four specific action items on which Realtors needed to focus in 2008;

• Participate in non-stop education and learning. Know your statistics of the local markets you serve. Understand the dynamics of what factors are creating our current economic conditions. With this knowledge keep your real estate “audience” constantly informed regarding how these factors impact their real estate experience. This will result in the clients hiring a Realtor who brings true value to the transaction of buying and selling.
• Network with your sphere of influence, your community, and BANKS.  Most banks are lost in the midst of the mortgage meltdown and need educated and competent resources to assist them with the sales of the home that are now a part of an unwanted inventory at the bank.
• A Realtor needs to invest in their business; internet marketing; print marketing; high tech tools that allows for communication systems that match the expectations of our sophisticated consumers in the East Bay; “drip system” marketing to their geographic audiences. And, most importantly, work, work, and work some more.  Realtors own a business. They are not employees. As a business owner what do you do when the economic model you started out with changes? You adjust your game plan, and work!
• If a Realtor is not willing to participate in the first three of these suggestions, then they need to exit the business, get a job that pays them an hourly wage or a salary, and re-consider real estate as a career at a later date.

I had the opportunity to spend three hours with Ms. Rodoni yesterday, as an audience member and for a one-on-one hour interview. There will be additional postings regarding many other economic and industry topics she presented. I look forward to sharing more of this valuable information for both Buyers and Sellers in the near future.  Until next time…

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In today’s crazy Buyer’s market, help is on it’s way for Sellers!

Remember in my recent posting that Sellers need to become Buyers immediately!  Well, here are some tips to help Sellers get their quicker.  Some of these seven tips are no-brainers, but several of them need to be reviewed again.  Here we go…

1. Real Estate is always a local. Know your market!  Many of the communities in the East Bay real estate markets are in great shape price wise.  Some are a real disaster. As a Seller you MUST know your local markets in order to price your home appropriately, or you won’t even get a nibble.  In addition, even the price ranges in each of the local markets make a difference as to which homes are more likely to sell quicker.  In the Pleasanton to Orinda corridor, the price range of $1,500,000 and up is not being effected much at all.  However, if you are looking the East counties, as a Seller your home is in the midst of a thousand or more for sale in the $500,000 range or less.  It is a challenge to data that is much past three months old because to the changing prices that are happening everyday.  Make sure you have hired a Realtor who specializes in your local region.
2. Check out who is buying in your market area.  Who are the Buyers and why are they buying?  Some of the factors besides the mortgage meltdown that is effecting pricing are;  new home developments in your area; is there a healthy employment base in your region; what is the relocation market like for transferees to your community; what price points seem to be closing escrow more than others?  Again, you need to work with a professional Realtor who can assist with providing you this critical information.
3. Interview a professional Realtor!  When you are interviewing a Realtor to represent you, ask them about market conditions, and their experience as to the realities of your local markets. Ask them about how many days on the market are the typical listings taking to sell.  Ask them about the months of inventory currently on the market.  For example, East Bay real estate markets have from 10 months to 28 months of inventory.  It is critical for you to know what this number is for your local community.  The pricing of your home will be greatly impacted by the months of inventory. Finally, ask them about the last two month trends regarding the absorption rate of homes declining or rising - another key factor to consider when pricing your home.
4. What will your house actually sell for?  It doesn’t matter what your home is listed for, it matters what it actually sells for. Because of the volatility of our current real estate markets you may even want to hire a licensed appraiser to prepare a price report for your home.  You will need to have an appraisal report as part of the sale of your home anyway. So, you may want to get it now as a part of your pricing decision.
5. Consider getting “in front of the market” with your listed price.  If your specific local market is still declining - like the East counties, and you and your professional Realtor can determine the actual downward pricing trend,  price your home as to where you think the price will be in three months from now!  If you are willing to use this strategy you will have the competitive edge over all the competition of similar listings that are chasing the market with price reductions each month.  The challenge is predicting the bottom of the real estate market in your local area is tough, even for your Realtor.  The caution on this strategy is that it is almost impossible to raise the price of your home when the market turns upwards!
6. Do you really have to sell your home now?  If you need to get a higher price than what the current market will bare, then the BIG question is, “Can I wait to sell my home when the market reverses it’s downward trend?”  If your answer is YES, then take it off the market, continue to do the fix-ups that will allow it to be in the best condition possible when you put it back on the market at a later time.  If the answer is NO, then Sellers need to get to “what is” regarding the fact they may not get their home sold for the price they hoped for.
7. Do your homework on the market where you want to BUY.  If the market where you are buying your next home is in a similar condition of your real estate market, then figure out how to become a Buyer as soon as possible!  It will not serve your long term plans to hang out being a Seller when you will be able to purchase your next home in similar market conditions. 

Can you tell I have an opinion as to what Sellers need to do TODAY in order to become Buyers?  I welcome your thoughts…Until next time!

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If a Buyer has the money, they are crazy not to buy NOW!

 So, my earlier blog posting about Sellers need to become Buyers as soon as possible is even more credible today than ever! This is a Buyers Market in East Bay Real Estate! It doesn’t matter if the Buyer is an investor looking at the bargains in East Contra and Alameda Counties, or if they are looking for a price appropriate home in the Pleasanton to Orinda corridor, NOW is the time to act. However, today’s Buyers need to have the money for a 20% downpayment. If you have the money you are going to get a great deal! “Lenders aren’t cutting everone off. They’re reverting to sanity after yers of making bad loans,” says Dick Lepre, senior loan officer at Residential Pacific Mortgage, in San Francisco.

Today’s Wall Street Journal stated, “If you are about to get into the housing market, this is all good news.  But before you begin visiting open houses, recognize that the old home-buying rules no longer apply in March 2008. You want to approach buying your first house with a financially realistice point of view.” Buyers need to remember that they are buying a home to live in, not speculating in the stock market or even putting money into a savings account. So, keep it simple stupid is the place to start. Buy smart. Get the best price and terms possible.

There are five steps that today’s Buyer needs to take;

1. Determine what you can afford!  Lenders have tightened their standards and are requiring more of a downpayment. The lender guidelines are that they do not want a borrower to spend more than 28% of their gross monthly income on a mortgage payment, property taxes and insurance. Also, be sure you have cash for closing costs - somewhere around 2% TO 3% of the purchase price. In addition, factor in moving costs and the home’s maintenance.
2. Know your local market! Location, location, location is still a key to purchasing your home. Don’t forget great schools, the expansion of new home developments, public works projects, etc. Remember, 80+% of home prices are what is happening in the local economies - job growth, neighborhood conditions, and quality of life.
3. Look for values, but don’t pass on a home to meets your needs! As you consult with your local real estate professional she/he will provide you the local information regarding what the typical price correction has been in the community you are considering. You may find in the East Bay real estate markets that prices vary from what they were in 2004 to 2006.  Make every dollar count in your purchse.
4. Don’t be afraid to negotiate - take your time! We have found while representing our Buyers, that many of the homes for sale are represented by Realtors that are still not dealing with reality regarding comparable sales. During the negotiating process, you may want to check out how much it would cost you to rent a home after totalling up monthly mortgage payments, property taxes and insurance. If you can rent the same home for virtually the same price it would cost you on a monthly basis to purchase a similar home, the Seller may be asking too much for the home.
5. Always buy for the long term! Your home is not meant to be purchased on speculation of rising prices! In a downward market, people should purchase a home only if they intend to live there for five to ten years. If you are not planning on staying in your home for awhile, then you may want to watch from a rental. From past history, housing bubbles take a couple of years to deflate. You may have a different opinion, but I truly believe that we are close the bottom of the price corrections in the Pleasanton to Orinda house markets. There still may be more price corrections in East Counties where the majority of the 100% financing occured.

So, you have now read my opinion about why Buyers need to act now!  One other factor to throw into the mix is that mortgage rates are still at 20 year lows, and the adjustments that Congress just passed for Jumbo loans allows for East Bay real estate Buyers to benefit from the increase to $729,000 for Jumbo rates! This is a much BIGGER deal than the “economic stimulas package” that President Bush is trying to sell as the solution for solving the issues of the U.S. economy. Don’t hold your breath that printing more money will be the solution.  Until next time….

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Who could ever imagine a real estate company that is operated out of a VW Bug - Bug! Real Estate is doing it right now?

Wallene Nelsen, the owner of Sycamore Creek Mortgage in Danville is the newest franchise owner for Bug! Real Estate. Her office is located in the Livery in Danville, but her real estate business is actually run out of a VW Bug that has been branded in an unforgettable manner!  Bug! Real Estate is the brainchild of Kevin Seney out of Coronado, California - right next to San Diego.

Ms. Nelsen embraced the vision of Kevin Seney, the CEO of Bug! Real Estate.  Mr. Seney started Bug! Real Estate with a mission to deliver a new real estate experience. If he could pull it off the company would be the first real estate company to break the mold of the current real estate business models. Mr. Seney says, “Today’s real estate companies don’t vary in the way they’re branded, how they advertise or how they service the customer. When you see something like that in the marketplace, that spells opportunity!” Ms. Nelsen has latched onto that opportunity.

Mr. Seney has witnessed how much money agents waste on marketing. “They run their $2,000 to $3,000 ad, and they don’t get any calls from it,” he says. Seney’s intuitions were confirmed when he read the Purple Cow by Seth Gordin, which emphasizes that advertising doesn’t work anymore, and it hasn’t for years.

Seney says the only three relevant factors in home selling are putting a sign in front of the home, putting the home on the MLS and pricing it right. “If you price the home at market price, it will sell,” he says. Without a need for marketing, Bug! has eliminated the expense from its budget and is a more efficient company because of it.  We will see if his theory holds true in the current market of homes taking two to three months to sell.

The other major costs for real estate companies is overhead. “I’ve surveyed hundreds of buyers, and very few ever meet agents at their office,” he says. “Buyers either meet at the property or sign the papers at the mortgage or title company.” In a laptop-friendly, work-from-home business model, the majority of agents use the office only for meetings. That’s why Bug! agents work virtually. Using the latest wireless technology, agents have full access to the MLS and the company’s intranet via their wireless laptops and cell phones.

Mr. Seney’s last hurdel in getting his company out to the marketplace was creating a brand. While Seney isn’t a big supporter of traditional advertising, he is a firm believer of creating a unique brand. “In business today, you have to stand out in an amazing way, and if you don’t, you won’t get any business,” he emphasizes.

So Bug! is the “purple cow” in a herd of herfers! In fact, Bug! bills itself as the no-frills, no-hype real estate company, making it a fun, friendly real estate brand like nothing else that exists today. To live up to that image, all Bug! agents drive the VW Bug, a car that not only represents a casual and fun experience, but it’s also an worldwide brand already. “And by using the VW Beetle as our delivery vehicle for this brand, we get to borrow that history,” says Seney.

Bug! agents drive around with the company’s logo on their vehicles, so the cars actually double as billboards. “You see them everywhere because they’re so recognizable,” says Seney, “and that’s the essence of what we’re doing from a marketing standpoint-we’re famous without much advertising.”

Having launched in February 2007, Bug! is going strong. It has opened four new franchises, as well as one regional office, and receives 100 inquiries per month from eager real estate brokers who love the Bug! model and want to open a franchise. It looks like Seney’s plans to turn the traditional real estate models upside down wasn’t such a bad idea after all. I will keep you posted on their progress, and how Ms. Nelsen’s Danville rolling Bug! Real Estate business turns out.  We wish them well, as the face of real estate continues to change. Until next time…Any comments???

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