Marin Real Estate—What to do now?

Mill Valley mom and Certified Financial Planner™ Katy Song offers some tips for buyers and sellers in today’s uncertain real estate market.

Springtime means the housing market is about to pick up from the dreary days of winter. Since 2008, home values nationwide have plummeted, and our little bubble of Marin was not immune. The hardest hit areas were San Rafael and Novato due to short sales and foreclosures, with values down 30–40% from their peaks. As a comparison, Mill Valley is down approximately 15% from its peak.

While 2009 sales volume and median home prices improved year-over-year in Marin, the average selling price was lower and houses are staying on the market longer. Due to the micro-markets within southern Marin, it is hard to make generalizations about the housing market but here are some tips on how to make the best of this market if you are a seller or a buyer.

Sellers

If you have to sell, do it sooner rather than later. Interest rates are expected to rise in mid to late 2010, which will result in more expensive borrowing costs and a slowdown in buying. Also, values are not expected to increase dramatically in the near-term. So, there will be little to no benefit of holding onto your home for another year. Winter inventory was slow, and you can leverage the lack of supply before more homes hit the market this spring. On a bright note, San Francisco residents are rushing over the Golden Gate Bridge to take advantage of lower Marin home values.

Tips for Sellers:

• Get an appraisal before going to market. In 2009, the Home Valuation Code of Conduct (HVCC) was put in place for single-family home mortgages to enhance the independence and accuracy of appraisals in order to protect borrowers and lenders. This means that a lender must hire an independent third party to conduct the appraisal, and unfortunately, the appraiser may not be familiar with the area and undervalue the home. Low valuations = Less money a lender is willing to lend. A low valuation is potentially the biggest deal breaker in this market, so know what your home is worth before putting it on the market. It is $300–400 well spent.
• Improve what you can. Cosmetic improvements and staging will help your home sell more quickly. Although you may not see more money from these efforts, your home will spend less time on the market and you will have a better chance of getting your asking price.
• Consider offering a 6% Commission. If you want to sell quickly, offering a 6% commission on the sale of your home will incentivize realtors to pay attention to your home and bring in more activity. This can keep the sale from going sideways and lingering on the market. The longer your home is on the market, the less likely you are of getting your asking price.

Buyers

The good news for buyers is that the quality of homes on the market is improving, you can better negotiate for credits and rates are still at historic lows. While it is a “buyer’s market”, there are still multiple offers on some homes and below are tips to help you to get the house you want.

Tips for Buyers:

• Get your finances in order. Lending standards are stricter but financing is available for those that qualify. Qualification depends on three factors that are often referred to as the “approval triangle”: 1) Income (debt ratio), 2) Credit (median credit score), and 3) Equity (size of down payment). The stronger each of these elements is for you, the more likely you will qualify for a jumbo conforming loan and get the best rate available.
• Decide how much you want it. Home ownership is not the right financial decision for everyone. Make sure buying a home fits into your long-term goals and is within your means. Keep in mind that given the decline in home values you should plan to stay in your home for 5-10 years if you want to see a profit, which means you need to seriously consider your commute and schools.
• Have your agent write a clean and complete offer, and present it in person. These simple things can determine whether or not you get the house you want.

Homebuyer tax credits have been extended into 2010, including an $8,000 credit for 1st time buyers in contract by the end of April and closing by the end of June (phased out when AGI > $170,000), which is a nice incentive to take the plunge into homeownership if you are on the fence.

Regardless of whether you are a potential seller or buyer, these tips can help you make the best of today’s market.

Katy lives with her husband and two young children in Mill Valley. Visit her online at www.katysong.com, or contact her at katy@katysong.com