Doing the Open House thing

Had a great open house this past weekend with my partner Vendy Chan.

What Is an HOA? Homeowners Associations—Explained

If you’re buying a condo, townhouse, or freestanding home in a neighborhood with shared common areas—such as a swimming pool, parking garage, or even just the security gates and sidewalks in front of each residence—odds are these areas are maintained by a homeowners association, or HOA.

So what is an HOA, and how will it affect your life?

HOAs help ensure that your community looks its best and functions smoothly, says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. For instance, if the pump in the community swimming pool stops working, someone has to take care of it before the water turns green and toxic, right? Rather than expect any one individual in the neighborhood to volunteer their time and money to fix the problem, HOAs are responsible for getting the job done. And the number of Americans living in HOAs is on the rise, growing from a mere 1% in 1970 to 1 in 4 today, according to the Foundation for Community Association Research. So, it’s wise to know exactly how they work.

How much are HOA fees?

To cover these maintenance expenses, HOAs collect fees (monthly or yearly) from all community members. For a typical single-family home, HOA fees will cost homeowners around the $200 to $300 per month, although they can be lower or much higher depending on the size of your unit and the services provided. The larger the home, the higher the HOA fee—which makes sense, because the family of four in a three-bedroom condo is probably going to be using the common facilities more than a single woman living in a studio.

In addition, most HOAs charge their members a little more than monthly expenses require, so that they can build up a reserve to pay for emergencies and big-ticket items like repairing the roof and water heaters, or acquiring new carpeting, paint, and lights for the hallways.

If the HOA doesn’t have enough money in reserve to cover necessary expenses, it can issue a special “assessment,” or an extra fee, in addition to your monthly dues, so that the repairs can be made. For example, if the elevator in your condo building goes out and it’s going to cost $15,000 to replace it—but the HOA reserve account holds only $12,000—you and the rest of the residents are going to have to pony up at least an additional $3,000, divided among you, to make up the difference.

And yes, you would still have to contribute your share even if you live on the first floor.

HOA rules: What to expect

All HOAs have boards, made up of homeowners in the complex who are typically elected by all homeowners. These board members will set up regular meetings where owners can gather and discuss major decisions and issues with their community. For major expenditures, all members of the HOA usually vote.

In addition to maintaining the common areas, HOAs are also responsible for seeing that its community members follow certain rules. Homeowners receive a copy of these rules, knowns as “covenants, conditions, and restrictions” (CC&Rs), when they move in, and they’re required to sign a contract saying that they’ll abide by them.

CC&Rs can cover everything from your type of mailbox to the size and breed of your dog. Some HOAs require you to purchase extra homeowners insurance if you own a pit bull, for example; others prohibit certain breeds entirely. An HOA may even regulate what color you paint your house, and what kind of curtains you can hang if your unit faces the street. Its goal is not to meddle—it’s merely to maintain a neighborhood aesthetic. However, if you don’t like being told what to do with your home, an HOA may not be for you.

What happens if you violate HOA rules?

That varies from place to place, but if you break the rules—or fall behind in paying your HOA dues—the consequences can be severe. You could be evicted, or worse. Some HOAs have the right to foreclose on your property, says Bob Tankel, a Florida attorney specializing in HOA law. So make sure you read your CC&Rs carefully so you know what to expect, and know the pros and cons of HOA living before you buy in.

Source: Realtor.com, Lisa Johnson Mandell
http://www.realtor.com/advice/what-is-an-hoa/?iid=rdc_news_hp_carousel_theLatest

U.S. to Expand Tracking of Home Purchases by Shell Companies

More than a quarter of the all-cash luxury home purchases made using shell companies in Manhattan and Miami were flagged as suspicious in a new effort to unearth money laundering in real estate, the Treasury Department said Wednesday. As a result, officials said they would expand the program to other areas across the country.

The expansion of the effort to identify and track the people behind shell companies, begun in March, means that there will now be increased scrutiny of luxury real estate purchases made in cash in all five boroughs of New York City, counties north of Miami, Los Angeles County, San Diego County, the three counties around San Francisco and the county that includes San Antonio.

The examination, known as a geographic targeting order, is part of a broad effort by the federal government to crack down on money laundering and secretive shell companies.

“The information we have obtained from our initial G.T.O.s suggests that we are on the right track,” Jamal El-Hindi, the acting director of the Financial Crimes Enforcement Network within the Treasury, said in a department news release. “By expanding the G.T.O.s to other major cities, we will learn even more about the money laundering risks in the national real estate markets, helping us determine our future regulatory course.”

Among the suspicious transactions that the Treasury Department found tied to sales in New York or Miami this year were a $16 million cash withdrawal, a person involved in counterfeit checks and someone involved in moving $7 million around in shell companies associated with South America, Treasury officials said.

The areas being added to the order are places where buyers frequently purchase luxury real estate using shell companies, the officials said. The dollar values involved purchases of more than $500,000 or more in Bexar County, which includes San Antonio; $1 million in Florida; $2 million in California; $3 million in Manhattan; and $1.5 million in the other boroughs of New York City. Title insurance companies, which are involved in virtually all real estate transactions, are charged with carrying out the order.

Treasury officials have said that their real estate tracking program was inspired in part by a series last year in The New York Times that examined the rising use of shell companies. The investigation found that real estate professionals, especially in the luxury market, often do not know much about buyers, and it uncovered numerous buyers of high-end real estate who had been subject to government investigations around the world.

One installment of The Times’s investigation documented properties purchased in shell companies by friends and family of the prime minister of Malaysia. Those properties were subject to the largest asset forfeiture order ever in a kleptocracy case, which was announced this month.

Treasury officials said they were seeing benefits to the program in Manhattan and Miami, citing an increase in suspicious-activity reports being filed by banks and noting that the Department of Justice is finding the combination of the real estate and banking information to be helpful in its investigations.

The broadening of the rule signifies that the Treasury Department thinks the benefits to law enforcement from this sort of data collection are likely worth the cost to the industry, said Eric Berg, a lawyer at Foley & Lardner in Milwaukee and former member of the kleptocracy unit at the Department of Justice.

“There’s a lot of pushback from industry,” Mr. Berg said. “Clearly some sort of internal dialogue came to the conclusion that this is worth doing.”

Even though the title companies are ordered to identify the buyers, the burden often falls to the real estate agent, said Aaron Leider, the president of the Beverly Hills/Greater Los Angeles Association of Realtors and owner of the Keller Williams agency in the Brentwood area.

“They come to us, because who knows the client?” he said. “They don’t know the client.”

Realtor associations in California and nationally have been in discussions in recent months about how much agents need to do to comply with the rule, Mr. Leider said.

Treasury officials said the data collected in these six markets would be used to evaluate a permanent rule in the future.


Source: The New York Times, Louise Story
http://www.nytimes.com/2016/07/28/us/us-expands-program-to-track-secret-buyers-of-luxury-real-estate.html?_r=0

Mortgage Math Made Simple

What’s more terrifying than global warming, national economic collapse, or a zombie apocalypse?  For many of us, it’s math—especially the type involved in securing a mortgage to buy a home.

But mortgage math doesn’t have to be intimidating. Though a home loan does indeed involve a few equations, it’s fairly easy to break it all down into the kind of simple arithmetic every home buyer can understand and, more important, needs to know.

Take note: The latest figures available show the median home costs about $220,000, so we’ll use that figure as a base for our calculations. Other figures we’ll use: an average family’s annual salary is about $54,000 and it carries $7,630 in debt.

How much do you need for a down payment?

Though you can contribute as little as 3.5% of a home’s value for a down payment, lenders consider an ideal down payment to be 20% of a home’s total price. So here’s the math on that for the average-priced home:

20% of $220,000 = $44,000 down payment

This would leave $176,000—the amount a home buyer will need for the mortgage.

Another reason to aim for 20% down: You’ll avoid paying private mortgage insurance, which is typically required under that threshold. And that will cost you about $1,000 per year, says David Bakke of Money Crashers.

(Still, if that hefty 20% is an unattainable goal, at least try to put down 10% for a significantly better interest rate than you’d get with 3.5%.)

How much will a mortgage cost per month?

A mortgage can be paid off in numerous ways, but one of the most typical is to stretch those payments out over 30 years—that way, you break it down into bite-size pieces. Building off the numbers above, here’s how much your average mortgage would cost per month:

$176,000 at 4% interest rate = $840.25 monthly payment

Keep in mind, this monthly bill does not include property taxes, home insurance, HOA dues, or other home-related maintenance fees, which vary by area but are in the ballpark of a few hundred per year for a home at this price.

Also note that the longer you stretch out your mortgage payments, the more you’ll end up paying in interest. Over 30 years, the total you’ll fork over in interest amounts to $302,490.33!

But there are ways to lower the amount you pay in interest—like paying off your loan faster. Finish in 15 years, and you’ll end up paying only $234,333.13 in interest. Granted, for a 15-year loan you’ll have to cough up more per month—$1,301.85 instead of $840.25. But the upside is you’ll save a sizable chunk in interest over the life of your loan, and be mortgage-free in half the time. So if you can afford it, it’s an option worth considering.

How much mortgage can I afford?

Of course, you’ll want to buy a home that you can comfortably pay for. So, how do you know how much is too much, too little, or just right? The way they do this is by determining your debt-to-income ratio.

For most conventional loans, experts say you’ll want your DTI ratio lower than 36%. That means your debts don’t exceed more than about one-third of your income. But how does a mortgage fit into that?

To figure that out, start with your gross income (what you take home before taxes). Let’s say your family pulls in the U.S. average, which is $54,000 per year. Divide that over 12 months to get your monthly income.

$54,000 / 12 months = $4,500 income per month

Then total up your debts—including what you owe on credit cards, auto insurance, and college loans. Remember, debt includes only items that appear on a credit report, not recurring expenses like groceries or phone bills. Since the average American carries an average debt of $7,630 per year, we’ll use that number. Divide that by 12 to get your monthly debt:

$7,630 (average debt) / 12 months = $636 debt per month

Now, add that monthly debt to your average monthly mortgage payment of $840.25 to get your total debt owed per month:

$636 debt + $840.25 mortgage = $1,476.25 debt per month

Next, divide your monthly debts by your monthly income

$1,476.25 monthly debt / $4,500 monthly income = 33% DTI

In this scenario, the debt-to-income ratio is 33%—just below the 36% cutoff. Which means this mortgage would most likely pass the bank’s muster with flying colors! Calculate your own DTI here.

See? Not so hard. Granted, this is a simplified version of mortgage math; your own results will depend on your income, debts, and other circumstances. But if there’s one thing we hope you take away from this, it’s that mortgages are nothing to fear—a little knowledge goes a long way. And if you get stuck, there’s no need to copy from your neighbor’s paper, since we have this handy mortgage calculator to help you whiz through these permutations with ease.


Source: Realtor.com, Margaret Heidenry
http://www.realtor.com/advice/finance/mortgage-math-made-simple/?iid=rdc_news_hp_carousel_theLatest

Should You Wait Until After the Election to Buy or Sell a Home?

With the Democratic National Convention kicking off on Monday, the most contentious presidential race in modern history is finally at full throttle. It’s all anyone can talk about these days: Who on Earth will be our next leader, Hillary Clinton or Donald Trump? Yet while all the political fireworks are spurring record ratings on CNN and Fox News—and, not incidentally, causing a boom in the installations of panic rooms and bomb shelters—it’s all apparently a bit of buzzkill for the housing market.

Sure, we’re in a boom market in many parts of the U.S. But even so, a palpable sense of unease and nervousness is convincing many Americans to hold off on buying or selling a home until after Election Day on Nov. 8.

This is hardly a new phenomenon. Even in less pugilistic eras, Realtors® have long noticed that home buyers and sellers cool their heels during presidential election years. Why? Because people are uncertain about what a new president will mean for the real estate market, and the U.S. economy as a whole. So they figure it’s wise to maintain a holding pattern until the next president is locked in place.

“People do use an election as an excuse to delay selling or buying a home,” says Florida Realtor Cara Ameer. “Having worked in real estate through several presidential election cycles, I have observed that it can seem harder in an election year to move properties. People have fears and concerns, whether perceived or real, about an election outcome that may have them putting their real estate process on pause.”

But should home buyers and sellers play a wait-and-see game during election years? It’s hard to say, although historic data do suggest that presidential elections can sometimes dampen profits.

According to a study of real estate in California going back to 1980, housing prices during presidential election years rise 1.5% less than other years. This might not seem like much, but let’s say your home is worth $166,000. Normally, you’d expect it to appreciate by $9,462 per year. But in an election year, that home would sell for only $7,462 more—or $2,000 less than usual.

But even if home prices do wind up dipping over the course of the great Chief Executive Death Match of 2016, many experts argue that this shouldn’t push home sellers to go into some kind of reverse hibernation until late fall.

“I don’t think it’s a wise idea to try to time any markets, especially housing,” says real estate expert Kurt Westfield at WCE Equity Group. “Housing markets are very localized, subject to microeconomic shifts. The election takes place on a much larger macroeconomic scale.”

In other words, the reality is that the presidential election has nothing to do with home prices in your particular area; those are determined more by—surprise!—simple supply and demand. In fact, if you feel that house hunters and hawkers in your area might be gun-shy right now, it actually leads to a prime opportunity. To borrow a sentiment from famed investor Warren Buffett, “Be fearful when others are greedy, and greedy when others are fearful.” Translation: Do the opposite of everyone else.

Ameer agrees with that sentiment.

“If everyone projects doom and gloom because they fear what might happen and decide to delay selling, then it is a great time for you to put your home on the market and make that move,” she says. After all, less inventory means more opportunity for home sellers, which might lead to multiple offers and push up your selling price.

Likewise, if you’re a buyer, an election year is a great time to bargain hunt, because fewer home shoppers may mean sellers will be more willing to cut a deal. Plus, mortgage interest rates are still at historic lows, which spells major savings.

“For right now, with interest rates remaining low, there has truly been no better time to maximize your purchasing power,” says Ameer. So forget about the presidential election—at least for now. “This definitely seems to be the year of buying a home, no matter what candidate ultimately wins.”

Source: Realtor.com, Judy Dutton
http://www.realtor.com/news/trends/should-you-wait-until-after-the-election-to-sell-a-home/?iid=rdc_news_hp_carousel_theLatest

When It Comes To Buying A Home, Are You A Donald or a Hillary?

Only because it is an election year and the Democratic conversion is on this week.



WHEN IT COMES TO BUYING A HOME, ARE YOU A DONALD OR A HILLARY?

Are you bold and independent, not considering anyone's opinion but your own?

Or are you more cautious and studied, making sure your choice is accepted and appreciated?

Do you buy like a Trump or claim your home like a Clinton?

There are pros and cons to both, depending on the situation. And, there are things you can learn from each of the presidential candidates that can make you a more successful real estate buyer.

Having confidence

It's no secret that Donald Trump will say anything to anyone at any time, regardless of (and sometimes in spite of) the potential blowback. Meek the man is not. Hillary Clinton is naturally more mild-mannered and careful in her approach and in the words she chooses. Basic gender difference? A huuuuuuuuuuugely exaggerated one, if it is.

But there's a lesson here on both sides. Being too aggressive can translate to bullying, which can turn off the seller and make them not want to work with you. But not being assertive enough can cause you to fade into the background.

Buying in a competitive market

He may claim to be a careful businessman with a track record of success, but Trump is also highly competitive and has been known to act on emotion. He's likely to haul off and make an all-cash offer over asking price that buries other potential buyers in a competitive market. His determination is often, simply, to win.

"A cardinal feature of high extroversion is relentless reward-seeking," Dan P. McAdams said in a psychological profile of Trump in The Atlantic. "Prompted by the activity of dopamine circuits in the brain, highly extroverted actors are driven to pursue positive emotional experiences, whether they come in the form of social approval, fame, or wealth. Indeed, it is the pursuit itself, more so even than the actual attainment of the goal, that extroverts find so gratifying."

Sound like something you would do? The relentless pursuit might win you the home. But will it be worth it?

When there's a prime piece of property everyone wants but the seller doesn't want to let it go

Again, a Trump-like buyer may let his or her wallet do the talking. A great offer may budge a seller who was previously steadfast about staying put. And, Trump wins points because he simply never backs down. But don't forget about the impact a human touch can have. A personal appeal to the buyer with, say, a handwritten note or a thoughtful detail like a new flowerpot filled with herbs because you see that the ones she has out front have died can go a long way.

Plus, Clinton has that secret weapon: Her husband, Bill. And you can't underestimate natural charisma and the influence it can have.

"Charismatic people start conversations with all types of people and network with ease," said Dal Sohal Strategies. "They come across as confident, being both credible and approachable to those they meet. People listen to them, respect their ideas, and want their opinion."

Now, these are strategies specific to real estate, but they can work no matter what side of the deal you're on. Of course, if you have a charismatic husband with a checkered history when it comes to women, you'll obviously want to be careful who you put him in a room with.

Dealing with difficult sellers

Trump has never been known as the calm one. In fact, if there's anyone who's likely to inflame an already tense situation, it would be him. Adopting Clinton's more laid-back approach and calm demeanor could be key in situations where the seller is, say, refusing to do repairs or make concessions.

When price negotiations aren't going well

Trying to agree on a sales price is often one of the more challenging, and potentially problematic, parts of buying a home. Using profanity or browbeating/belittling the other party is probably not the preferred method of dealing with a tenuous negotiation (although it does seem to be effective in some political arenas). A softer, friendlier, more Clintonian approach and the ability to compromise might be a better option.

Because you're not as financially solvent as you'd like to be

Whether it's money that can't totally be accounted for - perhaps because of how it funded or was funneled through an eponymous foundation - or your background includes several bankruptcies and some questionable investments, you want to make sure you're putting your best financial foot forward when buying a house.

Both presidential candidates depend on donors to support their campaigns. And both have made a tremendous amount of money outside of politics - Trump in real estate and business, and Clinton partially thanks to speaking fees and book advances.

Trump has made some particular savvy real estate investments while leveraging personal contacts and tax advantages to lower his risk - a good strategy for any buyer, especially if you're short on cash.

"A 1983 profile by Marylin Bender in The New York Times described Trump's strategy," said the Washington Post. "He had an eye for what Bender called ‘good financing,' meaning that as much as possible, he'd avoid taking risks with his own wealth. Sometimes, that meant getting taxpayers to chip in. Trump has bragged about his ability to manipulate public officials into granting him tax abatements and other subsidies. Early in his career, he was buying lots across the country and improving them on 40-year mortgages from the federal government at 5.5 percent interest. Those terms meant ‘we didn't have to put up much cash,' he told Bender."

You might not be able to depend on taxpayers or donors when buying your home, or get the kind of tax assistance Trump has talked about, but there are lessons here for buyers who aren't as qualified as they'd like to be:

• Ask for financial contributions from parents
• Find down payment assistance programs where available
• Work on your credit before buying so you'll qualify for a lower interest rate
• Look for tax-advantaged situations like areas where property taxes are lower or buy a home that needs to be fixed up and use an FHA 203(k) rehabilitation loan, which often offers tax-deductible interest on the improvements

Maintaining good communication

Many agents will tell you that having good communication between all parties - REALTORS®, seller, and buyer - is the single most important factor in a successful real estate deal. That means honest, respectful discourse, which could be hard for some people (looking at you, Trumps of the world). But it also means timely and effective communication, which is more and more often handled through email - which is, umm, harder for some people than others.

Source: RealtyTimes, Jaymi Naciri
http://realtytimes.com/consumeradvice/buyersadvice1/item/46171-20160721-when-it-comes-to-buying-a-home-are-you-a-donald-or-a-hillary

What If Your Home Appraisal Is Too Low?

You have signed a contract to purchase a house. Your potential lender has qualified you for the mortgage loan, on the condition that the house will appraise high enough to support the loan. Now you have learned that the appraisal has come in too low, and the lender is not prepared to commit the loan.

You have a number of options.

Let's take this example. Your contract price is $500,000, and you are seeking a loan which will be 80 percent of the purchase price -- or $400,000. Such a loan will help you avoid paying private mortgage insurance (PMI) premiums. However, the lender has appraised the house for only $480,000, and will only lend you $384,000.

Here are some of your options.

1. Cancel the deal. Read your sales contract carefully. Do you have a financing contingency, and do you still have time to terminate the contract if you cannot get the financing spelled out in the contract. If you have any questions about this, check it out with your attorney. Did you include a contingency for obtaining an acceptable appraisal? Read your contract carefully.

2. Put up more cash. You originally intended to put down $100,000 of your own money and get a $400,000 loan. Since the lender is only willing to lend you $384,000, you can -- if you have the cash and want to use it -- put up the additional $16,000 (or $116,000), and still buy the house. However, if the appraisal is truly accurate, give serious thought as to whether you may have overbid on the price. And don't forget to plug into your equation closing costs -- such as title insurance, recording taxes, title search, etc.

3. Change the terms of the loan. Obtain a first trust in the amount of $400,000, and a second trust in the amount of $16,000. This will help you avoid PMI. Talk with your lender about this; not all lenders like to use this approach.

4. Challenge the appraisal. You have the absolute right to obtain a copy of the appraisal. Read it carefully, and discuss it with your attorney and your real estate agent. You should then talk with the appraiser and/or the lender. If you believe there were errors in the appraisal, demand that the appraiser return to the property, and reevaluate the situation.

Keep in mind, however, that appraising property is not a science; at best, it is an attempt to determine what a piece of property is worth, based on a number of different methods of evaluation. While appraisers use such benchmarks as square footage, replacement value and other similar concepts, the bottom line in my opinion is that appraising a house is a very subjective exercise. Since no two houses are really similar, there has to be a lot of subjectivity involved in any assessment.

The best test of market value: what a buyer is willing to pay and a seller is willing to accept for the house.

Source: RealtyTimes,  Benny L. Kass
http://realtytimes.com/consumeradvice/buyersadvice1/item/46172-20160721-what-if-your-home-appraisal-is-too-low

Should I Buy Now Or Wait Until Next Year?

Source: Keeping Current Matters

Saturday Stats - Santa Clara County Real Estate Market Data for June 2016

June 2016 - Market Snapshot - Santa Clara County

View The Full Report Here!

Facebook's neighbors are losing their homes. What's being done about it?

This is happening all over the silicon valley, not just the City of East Palo Alto close to Facebook. 

The big tech companies need workers, they pay them well so they can afford the high cost of housing and the high rent. So naturally housing costs goes up. The problem is, not everyone works in tech or works in tech directly so most of them don't make the high paying salary. We are talking about people in support roles for the tech industry such as janitors, cafeteria workers, security guards, delivery drivers, etc. They are the ones getting screwed in the tech economy here in the valley and the tech companies are doing little help.

Read the great article below from the Guardian and when you're done, watch the very insightful video Million Dollar Shack: Trapped in Silicon Valley's Housing Bubble linked below



Facebook's neighbors are losing their homes. What's being done about it?
  
The first time Tameeka Bennett had to drive two hours in traffic to get to her job in East Palo Alto, she broke down in tears in her car. It was October 2014, and Bennett, 29, had never imagined she would have to move away from the Silicon Valley city where she grew up, which is one of the least affluent communities in the region.

But her family had lost their home to foreclosure, and they couldn’t find an affordable house to buy in East Palo Alto. So they were forced to move to Oakland, which is 40 miles north and a nightmarish commute away from Bennett’s job as executive director of Youth United for Community Action, an East Palo Alto not-for-profit group that fights displacement.

While Bennett recognizes that there are multiple factors driving the region’s housing crisis, it’s hard for her to ignore the most obvious force less than three miles north of her organization: the Facebook headquarters.

This week, Bennett and other northern California advocates are pressuring Facebook to make substantial investments in affordable housing as the powerful social networking company pushes forward with a major expansion that experts say will drive up housing prices and exacerbate income inequality in the center of the booming tech economy.

The brewing dispute over Facebook’s expansion in Menlo Park – which is adjacent to East Palo Alto and not far from the headquarters of Apple and Google – has exposed what many critics of the industry see as a glaring contradiction in the tech sector. That is, these hugely profitable companies cast themselves as do-gooder innovators creating transformative technology, but in their own backyard, they’re contributing to a crisis that has grave consequences for disadvantaged communities – and they’re doing little to “disrupt” the poverty plaguing their neighbors.

Menlo Park officials and residents debated Facebook’s growth plans during a lengthy city council meeting that dragged on past midnight on Tuesday evening. The public discussion came one day after reports that founder Mark Zuckerberg and his wife, Priscilla Chan, are exploring ways that their new philanthropic organization could help alleviate the high cost of housing in the region.

Facebook – which set up its huge campus in Menlo Park in 2011 – has proposed two new office buildings that would add roughly 126,000 sq ft to its campus, along with a 200-room hotel. The project is expected to bring more than 6,500 new employees to Facebook and the hotel, which would increase the entire Menlo Park workforce by more than 20%.

As part of the expansion, Facebook is required to contribute $6.3m to below-market-rate housing.

The company further agreed to provide $350,000 for a “study” of housing conditions; $1.5m for a “housing innovation fund” for various initiatives; $1m for for a “preservation fund” to buy and protect units housing “at-risk populations”; and $2.15m for reduced rents in 22 units of “workforce housing”, with priority given to teachers.

But critics say those are relatively inconsequential benefits given the size of the project and scale and urgency of the housing crisis – and considering that Facebook is now worth about $350bn, making it the sixth-most valuable company in the US.

Research has repeatedly suggested that Silicon Valley tech firms have worsened inequality, and data shows the area has lost affordable units at alarming rates. Recently, there have been numerous mass evictions and threats of widespread displacement near tech corporations.

With a surge in tech jobs at Facebook, the project will probably attract tens of thousands of additional workers in lower-paying jobs that support the industry, said Sam Tepperman-Gelfant, senior staff attorney at Public Advocates, a not-for-profit group that has, along with the ACLU, raised formal objections to Facebook’s project.

It is those workers and other poorer residents who will suffer the most from a jump in the regional housing demand, he said, pointing out that roughly 70,000 low-income workers in Silicon Valley already commute more than 50 miles to their jobs, which also has environmental consequences.

“It’s fundamentally not fair to ask low-wage workers in Silicon Valley to be bearing the personal costs for global corporate production,” he said. “Facebook could have a substantial role in correcting those deficiencies.”

In East Palo Alto, officials have also gathered compelling evidence suggesting that Facebook’s presence has had tangible consequences for low-income renters.

From 2011 to 2015, the average asking rent for a one-bedroom apartment in East Palo Alto increased by 89%, according to records.

One property owner acquired roughly 40% of the city’s entire rental housing stock in December 2011 after Facebook moved to Menlo Park – and the new landlord subsequently issued a significant number of eviction notices, officials have noted in city records.

That real estate company has specifically advertised new housing to Facebook workers, writing on its website: “Now is the time to consider affordable East Palo Alto apartments … before the rest of the Facebook and Google employees do!”

In a recent letter criticizing Facebook’s project, East Palo Alto’s mayor, Donna Rutherford, included that quote and pointed to research showing that in 67% of all recent house sales and rental units in East Palo Alto, the marketing materials have mentioned Facebook.

“It’s not that we’re against Facebook, but we want to make sure that when the expansion happens, it benefits not only a group of people, but the wider community,” said Carlos Martinez, East Palo Alto city manager.

Caprice Powell, 24, who grew up in East Palo Alto, said she is moving to Atlanta, Georgia, this summer in part because she can’t afford to rent here any more.

“Facebook is coming in and bringing along all these rich folks … They’re able to afford our housing, because it’s nothing to them.”

Powell said her sister and mother had both been priced out of East Palo Alto and that she was temporarily living in a small room in her godfather’s house – one of five people crammed into a two-bedroom. After she relocates to Georgia, she hopes to eventually return to East Palo Alto, but she’s not confident it will be financially feasible.

“It feels like East Palo Alto is not our home any more,” she said.

Bennett, who said she knew at least five local families who had been pushed out, also pointed out that Facebook had offered its employees generous bonuses to live closer to campus, which has accelerated gentrification.

“You are directly displacing families,” she said, adding that Facebook should look beyond its impact on Menlo Park and commit to funding housing in surrounding cities.

One resident at the council hearing also pointed out that black employees account for only 3% of Facebook’s senior leadership in the US, but others praised the company for bringing jobs and supporting local not-for-profit groups.

Facebook declined an interview request, but said in a statement: “We understand that our growth affects the everyday lives of our neighbors, and we want to be respectful and thoughtful about how we approach our expansion. The future of Menlo Park is extremely important to us, which is why we work with city and community leaders to tackle local priorities, including transportation, housing and the environment.”

The statement did not mention East Palo Alto.

At the council meeting, John Tenanes, Facebook’s vice-president of global facilities and real estate, did not address criticisms over housing, but said: “You have my commitment that Facebook will continue to be very active above and beyond what we’ve negotiated.”

A spokesman for the Chan Zuckerberg Initiative declined to comment on the rumors about potential housing initiatives, saying in a statement: “We are in the process of examining a number of potential issue areas for future work.”

Source: TheGuardian, Sam Levin
https://www.theguardian.com/technology/2016/jul/20/facebook-headquarters-expansion-menlo-park-california-housing



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Bay Area home sales: June median price sets record high

The median price for single-family homes in the Bay Area set yet another record last month, reaching $755,000.

But even as the price tag went up, the number of sales went down, reflecting what by now is an all-too common refrain in the region's housing story: high cost, low supply.

"People are struggling to afford a home, and not finding it," said Andrew LePage, research analyst for CoreLogic, the real estate information service that assembled the data.

June marked the fourth straight month of year-over-year declines in the number of houses sold in the nine counties. In some counties, the trend toward declining sales was even more pronounced. On a year-over-year basis, sales dipped for the fifth month in Santa Clara, San Mateo and Alameda counties. In Contra Costa County, sales were down year-over-year for the third straight month.

Even so, some real estate agents pointed to a silver lining. They reported a leveling of prices in numerous communities and — continuing a months-long trend — a lot less frenzied bidding.

"Buyers are waiting, they're pickier," said Michael Hall, a Pacific Union agent who has an office in Palo Alto and works deals on both sides of the bay. "We still don't have enough inventory, but the buyers are just not willing to throw down all that money. The buyers are telling us where the market is."

Of course, it all depends on one's perspective.

"If it's a pause in the market, then we're only seeing the beginning of it," said LePage. "There's still upward pressure on prices."

Compared to the same period last year, median prices in the East Bay rose 7.4 percent to $550,000 in Contra Costa County and 5.2 percent to $753,000 in Alameda County. The South Bay saw more modest increases, with a 4.9 rise to $1,200,000 in San Mateo County and 3.7 percent hike to $982,500 in Santa Clara County.

Those are daunting price tags. Yet looked at on a month-over-month basis, June prices were actually down just slightly from May in both Santa Clara and Alameda counties. San Mateo County's median price was up slightly from May, but fell short of the record high set back in April. Contra Costa County's median was up a modest 0.9 percent.

Sizing up the market, Shareen Edwards, a first-grade teacher in Sunnyvale, went hunting for a house with her fiance, Joey Grant, an electrician who works in San Mateo County. They began pricing houses that appealed to them and found that a number of those houses were selling for $200,000 or more over the listing price.

"The process for looking for homes in the Bay Area -- I would say it's insane," Edwards said.

Scaling back their search, she and Grant were guided by Hall, their agent, to a modest older house on a cul-de-sac in Redwood City: 1,800 square feet, with three bedrooms, two baths and a small backyard -- a solid family house for a couple that expects to have children.

Their parents contributed to the down payment on the house, which listed for $995,000 and attracted only two offers. "If this were a year ago, there would have been five or six offers," Hall said.

Edwards and Grant won out with a $1,042,000 bid.

"We got lucky," Edwards said. "And our family wanted us to be successful -- otherwise we would've been dead in the water. But this time we didn't get outbid."

About four years ago, Hall and Tricia Soliz, a Pacific Union agent who lives in San Ramon, teamed up to try and capture the growing East Bay market. This month, they tied the knot on a complicated deal -- essentially a three-way trade between the owners of three houses, two in Danville and one in Concord.

Like a game of musical chairs, each set of owners moved to one of the other homes. Each deal hinged on the next, and negotiations dragged out.

"You could feel the market shifting," said Hall, who believes that recent economic turmoil -- first in the U.S., then in China, then in the United Kingdom -- was a shock that "kind of put a cap on this incredible appreciation that we'd been seeing in the last two years."

Buyers "are getting choosier and sellers really haven't adjusted," said Soliz. One of the sellers dug in, expecting an offer more reflective of the 2015 market.

In the end, each deal closed. All the new owners plan to move on the same day at the end of the month, and Soliz plans to videotape the three-way trade.

As part of that trade, Eliot and Ashley Gillum will move from Concord to Danville.

As sellers, Eliot, a sales executive in tech, and his wife found they "needed to be a little less choosy," he said. Their 1,285-square-foot house in Concord, which listed for $499,000, sold for $515,000 after a higher offer fell through.

As a buyer, he had to stretch a few thousand dollars to make the move to pricier Danville. In the end, the Gillums, who have two young children, spent $807,000 on a 1,400-square-foot house next to a park and community swimming pool that listed for $795,000.

But the trade-offs were worth it, in part because Ashley, who directs an after-school program in Danville, will no longer have a lengthy commute with the kids.

"Could we be happier?" Eliot asked. "We're not people who want the big house. We want the family time."

Mission accomplished.

Source: San Jose Mercury News, Richard Scheinin
http://www.mercurynews.com/business/ci_30149003/bay-area-home-sales-june-median-price-sets

Insurance FAQs for First-Time Home Buyers

Buying home insurance for the first time is overwhelming, especially if you’re trying to go it alone.

Before shopping for coverage, review these common insurance questions to make sure you’re armed with the knowledge to find the best policy for your needs.

Do I need a policy before buying a home?

Technically, no.

Most states require drivers to possess auto insurance before taking the car off the dealer’s lot. But home insurance is different. You can legally own a home sans insurance.

However, if you need a loan to buy your home, your lender will likely require you to purchase home insurance as a way to protect its investment.

What coverages are included?

Standard home insurance policies typically include coverage for the structure of your home, its contents, liability, other structures (such as a toolshed), and additional living expenses. Let’s break these down.

Structure: If your home is damaged or destroyed by a covered peril and needs to be repaired or rebuilt, your insurance can help pay for these expenses. Structure coverage is not the same as the amount you paid for your home. You need to set your structure coverage for the amount it would take to rebuild your home from the ground up.

Contents: This coverage can kick in if your belongings are damaged or destroyed. It’s typically set between 50 and 70 percent of your home’s structural coverage. If you have high-value items, such as an extensive jewelry collection or rare pieces of art, there will likely be a cap on the repair/replacement value (between $1,000 and $2,000). To get more coverage for high-value items, you can add a rider policy to your home insurance.

Liability: If someone is injured on your property, the liability portion of your insurance policy can help pay for medical, rehabilitation, and/or funeral expenses, as well as legal fees in the event that the injured party sues you. Liability is typically set at $100,000 worth of protection. However, it’s wise to set your coverage between $300,000 and $500,000 — especially if your home includes attractive nuisances, such as a pool or trampoline — as medical and legal costs can add up rapidly.

Other structures: If your home has a detached garage or shed that is damaged or destroyed by a covered peril, your insurance can help pay to repair or rebuild it.

Additional living expenses: In the event that your home is destroyed and needs to be rebuilt, this coverage can help pay for living expenses, such as hotel and food bills for the duration of time that you’re displaced. Check with your insurer to see if this protection only covers you and your family for a specified amount of time.

What are covered perils?

Standard home insurance policies can cover damage caused by fire, windstorms, hail, lightning, theft, vandalism, explosions, and riots. Typically, water damage, such as that from freezing and bursting pipes, is also covered.

However, damage resulting from floods or earthquakes is not covered. Those types of natural disasters require separate policies and should be purchased if you live in a high-risk area, such as near a body of water or in California, where floods and earthquakes, respectively, are common.

How do I know how much coverage I need?

Complete a home inventory. This is a complete list of everything you own and each item’s value. Home inventories should include photos or video of all your possessions and the amount you paid for them — if you have the receipts, that’s even better.

Make multiple copies of the list and keep it in various safe locations, such as a safety deposit box. Having this inventory will allow your insurance agent to accurately recommend the amount of coverage you need, and will help get the ball rolling quickly if you need to file a claim.

What determine how much I pay?

When determining how much your insurance policy will cost, providers take into account:

• Your credit score.
• Claims history, both your own and the claims history for the area in which you reside.
• The location of your home.
• The age of your home.
• The costs associated with rebuilding your home.
• Your proximity to a fire department and hydrant.
• Whether you own pets or not. Owning a dog, especially certain breeds, means you’ll need more liability coverage.
• The coverages you select.

How can I save money on insurance?

There are a few tricks to saving money on your monthly home insurance premiums, but not all are overnight fixes.

• Discounts. Most insurance providers offer discounts for policyholders. Bundling multiple policies, such as home and auto, with the same provider is one of the simplest ways to save on multiple policies. Providers also usually offer discounts for safety features, such as security systems. Equipping your home with these additional features could help you keep more money in your wallet each month.
• Raise your deductible. Raising your deductible (the amount you agree to pay toward a claim before insurance kicks in) will result in lower premiums. However, don’t set your deductible so high that it would cause you financial hardship if disaster strikes. For example, if you can’t afford to pay $1,000 out of pocket at any given time, set a lower deductible.
• Improve your credit score. Most insurance providers use credit score as an indicator of how likely you are to file a claim. Studies have shown that those with low credit scores were more likely to file claims than those with high credit scores, who could afford to tackle some repairs or replacements on their own. Improving your credit score can ultimately decrease your premium payments, as you’ll become less of a risk to insure.

How do I choose a provider?

Shop around. All insurance carriers are different in terms of coverage and cost. The best way to find the right provider for you is to get quotes from several companies and compare them rather than making a rash decision.


Source: Zillow Porchlight, Shannon Ireland
http://www.zillow.com/blog/faqs-buying-home-insurance-201302/

The Lowdown, Dirty Truth About Buying a House at Auction

Buying a house at auction is an “adventure,” says Nedalee Thomas, a homeowner in Orange County, CA—and she should know. Thomas, a former Realtor®, purchased her three-bedroom HUD home through a stressful, fast-paced auction process.

“My prayer was, and had been for many years, that I would get a home at a discount,” she says. And so she did: The auction process netted her a dream place well under market price. She paid about $250,000 for the property—an astonishing deal, especially considering nearby homes go for nearly double.

In the four years since she bought it, the home’s value has increased by $200,000. “I never expected that,” Thomas says.

Looking to score a sweet deal of your own? Auction homes provide a number of benefits, but the process seems designed for a specific, adventurous kind of person. Here’s what to know going in:

You should buy a house at auction if you’re…

… patient and brave. While Thomas would buy her home through an auction again “in a hot second, absolutely,” the process was undeniably long and arduous.

One of the biggest differences between buying a home at auction and the traditional route? You don’t get to go inside the home before submitting an offer.

Before she put in her bid, Thomas looked at the exterior and peeked through the windows. The next day—after submitting an offer—she returned for a thorough walk-through.

“It was trashed on the inside,” Thomas says. “They had taken the shower heads, the light fixtures, and the fronts of the cabinets. The kitchen window had been painted lavender.”

But Thomas likes a challenge, so she kept moving forward.

The bidding process can be interesting

Once she submitted her bid for $251,551.51 (a highly specific number chosen partly because it was a hair over $250,000 and set her apart), she had to wait three days for an answer.

“I thought nobody would outbid this crazy number,” Thomas says. Still, they did—but then one by one, the higher bidders either dropped out or were disqualified. Soon, the house was hers.

Some home auctions involve in-person bidding, where you can view the property and compete directly against other potential buyers. But buying as is means you might end up with a bad roof and a useless basement. Plus, investors flock to these listings, offering high, all-cash bids. Even if you’re bold, you might have to unleash your inner gambler to win the home.

You should never buy a house at auction if you…

… have a very specific vision regarding what your future home should look, feel, and smell like. If you have some very particular, intractable ideas about what you want and need, skip the auction.

Picky buyers might find themselves stranded in a sea of not-quite-right listings. You have to be willing to accept that you might not get the four-bedroom ranch of your dreams. The kitchen probably won’t have an open layout. You might have to prepare for wood paneling.

Thomas had only three requirements: “I wanted a home at a discount, I did not want to fight for it, and it should have a view,” she says. “I got all three of these things.”

No, Thomas didn’t get quite everything she asked for. Her auction home is located on a lake, but a previous owner had installed a bedroom closet that blocked what should be a stunning view.

“I joked that the closet had a lake view,” she says. To fix it, she changed the home’s layout to make room for a window.

Make sure to do plenty of research on the market

Any time you’re buying a home, you need to do your homework. But those rules are twice as important when you’re buying a house at auction—especially if you’re attending a live auction, where excitement and emotion can cloud your judgment.

At the first auction Thomas attended, shortly after the housing crash, she decided the property wasn’t worth the cash.

“I absolutely guarantee you that the price they paid was more than it was worth,” she says. Two bidders went back and forth six times before settling on a price, and “the reason the other people weren’t bidding was because it started out too rich in the first place.”

Even if you’re not planning on attending an in-person auction, a thorough understanding of the market in the area you’d like to buy is essential. Even HUD auctions move quickly, and you’ll likely need to put a bid down on the spot.

“You need to look at comps,” Thomas says. (Comps are comparable sales, or similar houses recently sold in the same area.) “You need to be aware of what the value in the neighborhood is.”

You can use realtor.com’s Local search to understand what similar houses are worth.

Make sure to budget (time or money) for repairs

Remember Thomas’ missing shower heads, light fixtures, and cabinets? All of that needed to be repaired—and that comes at a price. She originally budgeted $35,000 to get her new home into shape, but she ultimately spent about $85,000 on rehab.

And cash isn’t the only precious resource spent in a renovation. Thomas spent nine months living in her office while construction crews worked on her new home.

Despite the long wait and huge expense of repairs, Thomas says buying her home at auction was a fabulous experience. But homeowners looking to follow her lead need to be prepared for the pitfalls—and having an adventurous spirit won’t hurt.

Source: Realtor.com, Jamie Wiebe
http://www.realtor.com/advice/buy/buying-a-house-at-auction/?iid=rdc_news_hp_carousel_theLatest

Cupertino? Nah, it's Apple Town

Editor's Note: A satirical argument for the company town.

You may have read recently that there is a wide assumption in Santa Clara political circles that the San Francisco 49ers are hoping to recruit a slate of sympathetic candidates to run for the City Council. As one of the most significant employers in town, the team hasn't really denied the reports.

Woeful as the players have been on the field, the Niners may be onto something profound. They just don't go far enough.

Why not drop the pretense and let corporate interests run our cities? Put another way, it's time to bring back the company town. It will make things far more efficient.

The first task in this badly needed makeover is changing the names. Santa Clara? The current name is probably a violation of church and state to begin with. Why not rename it Ninerdom. Mountain View? Who can see the mountains, anyway? Change it to Googleville.

Cupertino? Just make it Apple Town. Los Gatos? In honor of Netflix, call it Stream City. And Menlo Park? Now that Facebook has moved in, make it the warm and fuzzy "Friendvale.''

REBRANDING

Frankly, I see a lot of branding opportunities here. "Cupertino," for instance, traces its current name to a saint who came from the Italian town of Copertino. Does anyone know that? Of course not. But everyone knows Apple, one of the most famous companies in the world.

It's when you merge corporations with local government, however, that you see the real advantages of my plan.

We've all known for a while that Facebook and Google run a far more efficient transit system than our VTA. Once the companies run local parks, police and planning departments, the long waits we complain about will diminish.

Consider what this would mean for the average city council. Instead of tedious and expensive elections that make politicians captive to special interests, we can appoint representatives from corporate HR, marketing, engineering, finance and administration. The robustness of council debate won't suffer: God knows marketing and engineering already disagree.

EFFICIENCIES

In this new world, silly battles with NIMBY neighbors over projects like the "Grove," Neflix's expansion in Los Gatos -- excuse me, Stream City -- would come to a swift end.

Netflix's corporate leadership could simply decree that a building would happen. No more moaning about traffic. To deal with dissenters, it could call out the cops, who would get stock options and free subscriptions to work for the company.

Those fights about whether an official has a conflict of interest? A quaint thing of the past. There will be no conflicts. There's only one interest -- the corporation's.

Sure, I know there will be some doubters, some lily-livered ACLU types who resist change. Someone might suggest Apple Town would trample privacy in the interest, say, of collecting taxes. Someone else might say that Googleville would know too much about its residents.

But as long as this is done efficiently, people will forgive. My idea takes the concept of government "working at the speed of business" to its logical end.

To paraphrase Calvin Coolidge, government is business. And business is government. Let's play ball.

Source: San Jose Mercury News, Scott Herhold
http://www.mercurynews.com/scott-herhold/ci_30140154/cupertino-nah-its-apple-town

INFO GRAPHIC - What Sells?

What Do Buyers and Sellers Pay in Closing Costs?

Rarely does a buyer or seller show up to the closing without knowing exactly what their costs of sale will be.

In fact, based on the mortgage loan amount of the purchase/sale price, it’s not hard to ballpark either side’s closing costs. Before you get too far along in the process, ask your real estate agent or mortgage professional for an estimate.

Once you have a real, live deal with a closing date, you should be able to know your costs pretty close to the penny.

If you’re new to real estate or haven’t bought or sold in a while, here’s what you need to know about closing costs.

Buyers have a higher number of costs
In a closing, both buyers and sellers have costs. Usually, the buyer is faced with more line-item expenses than the seller (although sellers pay more).

For starters, most buyers are getting loans to make the purchase, and many of the charges stem from the loan.

A buyer should receive a loan estimate form early on in the sale process. This document spells out all the approximate costs the buyer will face when making the purchase, so there aren’t any surprises at closing. Some buyers use the information on the loan estimate form to shop for different lenders, interest rates and costs.

Typically, buyers getting a loan will see some of the following costs:

• Appraisal fee
• Origination fee
• Prepaid interest
• Prepaid insurance
• Flood certification fee
• Tax servicing fee
• Credit report fee
• Bank processing fee
• Recording fee
• Notary fee
• Title insurance

Be sure to go through these fees line by line with your mortgage professional to understand exactly what they are and how they apply to your loan.

Aside from the expenses of getting a loan or buying a home, some expenses, such as property taxes or homeowners association dues, are pro-rated and paid at the time of closing. For example, if you’re buying a home and you close toward the end of the property tax period, you’ll likely need to pay the balance of taxes upfront.

The same holds true for prepaid loan interest. If you close toward the end of the month, the lender may ask for the first month’s payment up front.

Negotiate sharing some of the costs
Coming up with an extra one to two percent toward closing costs can be a bigger deal than a $5,000 reduction in the purchase price, so ask the seller to pick up some of the closing costs as a part of the negotiation.

Credit for $5,000 to go toward closing costs will be a much greater bang for the buyer’s buck. The price reduction won’t amount to much more than a few dollars per month over the length of the home loan. But saving $5,000 at the closing will be money right back in the buyer’s pocket.

Sellers pay the commission
For sellers, there are always fewer line items on an estimated closing statement. But the seller generally bears the biggest brunt of the fees: the real estate commission.

The commission is based on a percentage of the total sale price, so it tends to be the biggest fee. In addition to the real estate commission, sellers may have to pay the balance of their property taxes, if they haven’t done so already, as well as any prorated homeowners association dues.

Source: Zillow Porchlight, Brendon DeSimone
http://www.zillow.com/blog/who-pays-closing-costs-140343/

Best Home Buyer Tools

How to Prepare Your Home for an Appraisal

Getting your home appraised can often be a nerve-wracking experience. Your home and your handy work will be on display to be judged and valued so that you can move forward with selling your home.

But it doesn’t have to be a stressful experience. With the right tools, tricks and savvy, the appraisal process can not only go smoothly, it can also help you make a giant financial leap toward a future in a new home.

Do your homework
“Just like anything else — for example, if you’re going to select a doctor, dentist, or lawyer — you do your homework to find out the appraiser’s market knowledge of the area,” says Rick Singh, a property appraiser in Orange County, FL.

Ideally, your appraiser will be a local who knows the area well and who has been around long enough to see changes in the market. It’s also crucial to hire an appraiser who is state certified.

Check your maintenance
Whether it’s a loose shingle, chipped paint or dirty carpet, be sure to take care of it before the appraiser comes. Anything obvious that needs work could potentially eat away at your home’s value.

Also, keep a list of maintenance work that has been done on the home. Have a running list of what you have fixed and upgraded in your home as well as the amount of money you have spent.

Maximize curb appeal
When you’re getting your home appraised, remember that your house should look like the nicest one on the block.

“Landscaping plays so much into making a good first impression,” Singh says. “And remember that a first impression is a lasting impression. Make sure [your yard] is tidy and up-to-date. Trim or replace dead plants, and make sure it’s nice and green.”

Ensure appliances work
Do you have a dishwasher that only works when you give it a little kick, or a refrigerator that doesn’t keep your food as cool as it used to? These malfunctioning big-ticket items in a home could be a huge disadvantage to your home’s appraisal value.

Show pride in ownership
Although your home isn’t necessarily valued on the interior decor, it doesn’t hurt to show that it’s well cared for.

This doesn’t necessarily mean you have to trade in your T.J.Maxx finds for a pricey interior makeover, but make sure your home is neat, tidy, and exhibits that you generally have an interest in keeping your home looking its best.

Know your neighborhood
Before you get your home appraised, be sure you know what comparable nearby homes are going for, because that can be a huge predictor of your home’s value.

Also, inform your appraiser of any extraordinary circumstances, like if someone in your neighborhood had to sell their home quickly. Sellers may have to lower the price of their home to get out in a timely fashion in the event of death or job relocation in another state.

It’s extremely important that both you and your appraiser are knowledgeable about your neighborhood to get as accurate a value as possible.

Understand that cost does not equal value
When you make improvements to your home, you hope that everything you’re upgrading will increase your property value — but this isn’t always the case.

“Sellers may think, ‘I spent $60,000 on my home and $20,000 on the pool, so the home should be worth $80,000 more.’ However, the market may say it’s only worth $5,000 more. Find out what the economic investment is, because the rate of return is so important,” Singh says.

If you’re not satisfied, reach out
If you’re dissatisfied with the appraisal value, Singh advises contacting the appraiser about your concerns. Make sure you have data to back up your claims when you call to voice your opinion.

“You can always get a second appraisal,” Singh notes. “If you really think something was done incorrectly, voice your concern to the appraisal board as a last resort. All appraisers are licensed, and they don’t want to jeopardize their license. However, I often recommend going back to the appraiser and showing [him or her] the facts.”

Source: Zillow Porchlight, Jamie Birdwell-Branson
http://www.zillow.com/blog/prepare-home-for-appraisal-200936/

Homeless camps near Facebook a growing safety concern

MENLO PARK -- Homeless encampments are being blamed for at least three brush fires since March near Facebook's headquarters in Menlo Park, including one that closed a major roadway during rush hour and caused nearby homes to be evacuated.

Menlo Park's fire chief is urging police and code enforcement officials to do something about the camps, at least three of which can be found along the railroad tracks between Willow Road and University Avenue.

"This is the third or fourth time we've been in there in the last four months, and every time it's related to homeless encampments," Harold Schapelhouman, chief of the Menlo Park Fire Protection District, told The Daily News after a 2-acre blaze was reported near Facebook about 12:30 a.m. June 24. "Allegedly it was a cooking fire that got out of control. ... It's not like it's a camping area. The significance of these encampments potentially becoming a threat for the broader community is definitely a concern for us."

Since arresting Sergio Anguianolopez, 35, a transient, for allegedly setting a 13-acre fire near Facebook in March, police have been patrolling the Kavanaugh Tract, a marshy area between University, Bayfront Expressway, Willow and Adams Way at the city's border with East Palo Alto.

According to Sgt. Eric Cowans, that fire was sparked during an argument between Anguianolopez and another transient who were "fighting over drugs and other issues." Anguianolopez previously was arrested by Menlo Park police, in 2010 and 2014, both times for narcotics-related warrants.

"There are definitely health concerns and hazards out there with the garbage and syringes. It is eventually going to be problematic," Cowans said in April. "We've taken an active role in regularly making visits out there and trying to make sure everyone's staying on the up and up. ... Sometimes we'll go out there and we'll contact 15 people and the next day, there'll be three people out there. The one common thing we find is they're all into narcotics."

According to Cmdr. William Dixon, officers haven't run across any homeless people in the camps in recent weeks.

"There are easily two or three specific areas people have definitely been in, based on debris present," Dixon said.

A problem for police is the area is so remote it's only when a fire breaks out that people realize anyone is using the marshland as a residence. The camps are a 10-minute walk from any roads.

"Would I consider them active camps? That I don't know," Dixon said. "Is it something that we get calls for service out there? No. ... For lack of a better term, I can honestly say we are not going to employ a scorched-earth policy. It's ineffective; it doesn't work."

According to Schapelhouman, the fire threat in the tract is much greater now than just a few years ago, as the extended drought has dried out vegetation.

In the March fire, flames reached 25 feet high, and with wind gusting as high as 25 mph, they jumped to the center median of University Avenue and threatened to cross over to East Palo Alto residences.

"Smoke was blowing horizontal, which is never a good thing," Schapelhouman said at the time.

Dixon said if police were able to identify a specific group of people in the camps, something could be done.

"It's certainly something that's more in the conversation than a year ago," he said. "If I had something definitely identified ... I'd say, let's go do something about this."

But, as Dixon and Schapelhouman both agree, a big complication is that individuals living there want to stay removed from the rest of society.

"Not everybody is going to want to be moved into a shelter, and there are people who have a criminal history, alcohol and drug abuse," Schapelhouman said. "From a fire and medical standpoint, we're in the camps quite a bit."

Dixon said the police department actively tries to connect homeless people with county agencies that provide assistance, something which he said has seen a 100 percent success rate in downtown Menlo Park, aside from one longtime transient who shuns assistance.

"I'd like to be able to lend support to anybody who's out there," he said. "I really hate to call it a problem."

Source: San Jose Mercury News, Kevin Kelly
http://www.mercurynews.com/real-estate-news/ci_30099252/menlo-park-homeless-camps-near-facebook-growing-safety

Crowdfunded Real Estate: Should You Jump on the Bandwagon?

Just about everyone these days is looking to make a few extra bucks. But with the recent stock market turmoil (thanks loads, Brexit!) and paltry interest rates making savings accounts seem only slightly better than just stuffing cash underneath your Casper mattress for (lumpy) safekeeping, investors are on the prowl for the next lucrative investment.

Enter crowdfunding. It’s a concept that has been defined over the past decade mainly by money-raising schemes for offbeat, feel-good, or flat-out-weird ventures: documentary films, donations for disaster relief, headphones for cats, you name it. So what’s the allure for real estate, a booming business that generally doesn’t seem to need the help of contributions from mass groups? Simply put: It allows average folks to live the speculator’s dream—to  pool together their money to invest in apartment complexes, office spaces, even commercial shopping centers.

Give the credit to a change in federal laws that kicked into effect in May. It opened up the concept of getting money back on crowdfunded investments—as opposed to, say, just a free T-shirt via Kickstarter—to the masses, rather than just the wealthy.

As a result, crowdfunding real estate companies have been popping up at a breakneck pace, allowing ordinary men and women to dream of becoming a real estate mogul. (Because real estate moguls are all the rage these days, in case you haven’t noticed.)

But are these types of projects a safe investment for those who don’t have billions (or maybe millions) in the bank like Donald Trump? The experts say: Probably not. After all, you’d be gambling on projects that may never get constructed or rake in profits.

“Crowdfunding can be insanely risky,” warns Sherwood Neiss, principal of Crowdfund Capital Advisors, a venture capital firm that invests in financial technology companies. “Your chances of losing your investment is greater in crowdfunding than [in many] other forms of investing.”

How does crowdfunded real estate work?

Here’s the idea: Instead of getting a token gift for your cash contribution, like you would on Kickstarter or Indiegogo, fledgling venture capitalists will get an agreed-upon amount of money back from their investments—or a percentage of the profits if the projects are successful. Note that little word: if. If they don’t actually get built or turn a profit, investors could say bye-bye to a chunk of cash.

Amateur financiers can now go to websites like Fundrise, iFunding, or CrowdStreet and plunk their money down on various real estate projects ranging from new hotels to shopping complexes. Different companies and endeavors require different minimum investments, charge a variety of fees, and deliver disparate returns.

Fundrise, for example, boasts 12% to 14% average returns on investments as small as $1,000 on its website. Neiss, the venture capitalist, says that if the projects are successful, investors can pocket returns ranging from 8% to 12% annually, or even higher over a span of severals. And CrowdStreet, which set up shop in 2013, delivered an average 14.6% return on investment in 2015, says co-founder Darren Powderly.

“We’ve been buying stocks online for 20 years,” Powderly says. “So why not be able to purchase private investment real estate online as well?”

There are now about 150 crowdfunded real estate platforms in the U.S. “It is exploding,” says Ian Ippolito, a retired entrepreneur and investor who edits The Real Estate Crowdfunding Review, a website with tools and advice for would-be crowdfunders.

Before the change in May, only accredited investors were allowed to put money into crowdfunded projects where money was expected to be returned.  Accredited investors are folks who earn at least $200,000 a year ($300,000 if they’re married) or have a net worth of at least $1 million (not including their main home).

But the most recent part of the Jumpstart Our Business Startups Act, or JOBS Act, a four-part law that was originally passed in 2012, opened the doors of crowdfunding to the other 99%. The investments are regulated by the U.S. Securities and Exchange Commission.

Now, those bringing home less than $100,000 a year can invest up to $2,000 annually. Or they can put down up to 5% of either their income or their net worth (whichever is less), according to the SEC. Those making more than $100,000 a year can plunk down up to 10% of their annual earnings or net worth, with a $100,000 cap on investments.

Invest with care

But would-be investors shouldn’t let the SEC’s oversight of the investments lull them into a false sense of security.

“The SEC is not vetting how good the [investment or] sponsor is,” says Paul Habibi, a real estate and finance professor at the University of California, Los Angeles. “The SEC is vetting for crooks.”

More cautious investors, financial experts suggest, should consider parking their money in debt instead of equity.

In plain English, debt typically refers to shorter-term loans, around three to five years or less, that developers use to fund the projects and are sometimes backed by the property itself, says Seth Oranburg, a law professor at Duquesne University in Pittsburgh. Therefore, it’s generally a safer bet.

Equity is more like stock in the project and is therefore more risky if the development never gets off the ground or doesn’t turn a profit. The money can be tied up indefinitely and, in some cases, never returned.

But whether it’s debt or equity, crowdfunded real estate is “a new and risky area that people should only enter if they’re willing and able to risk losing their investment,” Oranburg says. Got that?

A safer alternative

Wannabe real estate magnates who don’t have the stomach to risk their piggy banks may want to consider real estate investment trusts instead, says Matthew Fronczke, a research director at kasina, an industry financial services advisory firm.

REITs are typically corporations that invest in real estate and mortgages, and public REITs are traded on the big financial exchanges like a stock. Typically, investors can sell their stock at any time instead of tying it up for years through crowdfunding.

Another REIT advantage: Much like mutual funds, they typically have skilled investment teams managing the money, vetting potential developers, and putting the deals together. Sure, crowdfunding platforms will often scrutinize the investments they offer. But it’s not always to the same degree.

And everyday folks, no matter how many books they read and online seminars they take, can’t be expected to analyze every project, every construction site, every location, and the demographics and economies of those areas.

They should, however, do their homework and look for local projects they can see go up with their own eyes.

“Be very wary of developers that have no track record, no history, haven’t raised any money, and have no experience of success,” Neiss says. “Look for the smaller investments that you know the community could actually use.”

Advantages of crowdfunded real estate

Despite the risk, there are some advantages to putting your money into these newfangled real estate investments.

Crowdfunding allows amateur financiers to pour their cash into a variety of projects located all over the map—including within their own communities. They’re also in the driver’s seat, choosing where their money goes instead of leaving it up to, say, the REIT.

Bottom line: Aspiring real estate magnates eager to take their chances shouldn’t put more than 10% or 15% of their investment portfolios into crowdfunding, says the Real Estate Crowdfunding Review’s Ippolito. Diversify, diversify, diversify!

“That way when the stock market is doing bad, real estate will probably be doing good and hopefully offsets it,” he says.


Source: Realtor.com, Clare Trapasso
http://www.realtor.com/news/trends/crowdfunded-real-estate/?iid=rdc_news_hp_carousel_theLatest