The Broker's Record

Property Searches using Maps

April 27, 2006

The latest craze to sweep the Real Estate Web is the use of mapping technologies to find properties. Wouldn’t it be nice if you could draw a circle on a map, and then say “Show me every 2+ bedroom house in that circle, under $800K?”. It sure would be! Some web sites let you do this already, with varying degrees of ease, and I am looking at bringing that kind of functionality to this web site as well.

If you come to my web site and enter a property search, the search is managed by a third party service I pay every month for, called PropertyMinder. I’ve been using PropertyMinder for years – I’m probably one of their longest-running clients, and probably one of their most resource-intensive. The folks at PropertyMinder have just now updated their service to include some kind of mapping – you can now see the properties that match your search request plotted on a Google map. It’s pretty cool as far as it goes – but it’s not quite what I’d like to deliver to my clients.

Still, though, it’s better than nothing! So if you have already signed up for a property search on my web site, the next time you log in to see your search results, you will see a new option, which is to view the listings on a map. When you do, you will be shown a screen that may look a little something like this:

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Seeing Red (Tags)

April 26, 2006

It seems that the properties I get the most inquires about are the ones with red tags on them – they tend to be the cheapest of the cheap, and so they get a lot of interest from people. Also, red tagged properties tend to stay on the market a long time, so it’s not uncommon for me to have several buyers write to me about the same property.

So what is a red tag? A red tag is a notification that a building or improvement is out of compliance with the county code. It might be a violation of the building codes, zoning ordinances, environmental protection ordinances, or it could be the that the building is hazardous and needs abatement.

How does a red tag get to be put on a property? What often happens is that a neighbor will inform the county that he suspects some kind of violation is occurring on a given property, as might happen if someone is building a fence that is too high and might block a view or create some other hazard. Another common way to get a red tag is to convert an area of a home (e.g. a garage) into living space, and then to rent out that living space. Many a disgruntled tenant has informed the Planning Department that their landlords, after having evicted them, has an illegal dwelling unit on their property! And let’s not forget the disgruntled ex-spouse, who, after quitting a property, informs the county of the violations they know to exist.

It’s easy to file a complaint that can lead to a red tag – you can do so right from the comfort of your own web browser:

http://www.sccoplanning.com/phpforms/codecomplaintform.htm

Some red tags are easy to rectify. For example, if you’ve constructed a fence that’s too tall – just lower the height. If you’ve illegally converted a garage to a living space, just remove all the stuff you added, like maybe the toilet/shower/sink and whatever else it is the county or city asks of you.

Other red tags, however, are more difficult to rectify – for example, if you have done some illegal grading (a violation of the environmental protection ordinances). To do this, you’ll need to get out an engineering company to design a proper retaining wall, etc. – this can be pretty expensive, several thousands of dollars, then apply for the permit, and then build the retaining wall again.

Another example might be a house with severe structural issues, such as a failing foundation. This might be very expensive to fix – $50,000 or $100,000 or even quite a bit more. Now, how many people – even homeowners – have that kind of money they can easily get ahold of? And any home owner that can’t get that kind of money is just the kind of homeowner who may be forced, by circumstances, to sell the property, with the red tag on it.

Unfortunately, a red tag is considered to be a cloud on title by most lenders – and lenders are very, very wary of any kind of cloud on title! That means that it’s comparatively difficult to get a loan on a property with a red tag. Consequently, a seller will usually need to discount the price of the property quite heavily – beyond the money needed to rectify the red tag, even – to find a buyer who can pay all cash for the property, or who has a lender willing to work a red tagged property. These kinds of lenders are typically “hard money lenders” who require that the buyer have a significant amount of cash (e.g. 30%) they can put towards the purchase…and will usually have a fairly high interest rate (5-7% over the standard 30 year fixed, say). The idea behind financing such as this is that the buyer will buy use the financing in the short term only, improve the property (and remove the red tag), and then re-finance it with traditional financing.

Here is a picture of a red tag on a house that was in danger of falling down a cliff:

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March Madness

April 17, 2006

For those of you who are readers of my Santa Cruz Real Estate Market Trends Newsletter, this isn’t going to come as any surprise…but if you are not a regular subscriber to this free (and worth every penny!) e-zine (sent to you monthly via e-mail), this may come as news to you:

Santa Cruz Home Sales surged 53.3% in March 2006, from February 2006.  Yes, February was a dismal month in Real Estate land, but in March we saw a strong rebound in sales.  However, home sales were down 15.9% from March 2005…which was a banner month for home sales, as anyone who was trying to buy a home in Santa Cruz back then will attest.

And what about prices?  As compared to March 2005, home prices in March 2006 have increased modestly – from a median of $725,000 in ’05 to $740,000 in ’06 – a gain of around 2.1%.  Phew!  Not what you would call a massive rise in home values, but not a drop, either, as many Chicken Littles have been screaming about. 

What’s also worth nothing is that the listing-price to sales-price ratio has dropped to 96.9% – in other words, sellers are taking about 3% less than what they’re asking for.  If you see a home priced at $600,000 you can expect that really, the sellers will end up getting only around $582,000 for it.  Also, days-on-market has risen to an average of 75 or so…if you’re interested in a home that’s been on the market longer than that, you might be able to squeeze the seller out of even more of a discount than that.

 

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Maps of Santa Cruz

April 13, 2006

I am not sure how many of you have found this yet, but on this web site there is a great resource for Santa Cruz Maps. Anyone in the Real Estate profession in Santa Cruz is a map-hand – Realtors are always looking at maps: streep maps, parcel maps, topographic maps, etc. Whenever I find a cool mapping resource, I put it in the Santa Cruz Maps section of this web site.

I mention this because today I discovered a new mapping resource that had heretofore escaped my attention: The Santa Cruz GIS Map Gallery. There is a link to the Map Gallery from the GIS Web Site, but somehow it had escaped my attention all these years. It could be that they added this with the upgrade they did to the GIS system a few months back and that’s why I hadn’t seen it. Anyway, the Map Gallery is definitely worth checking out. They have a variety of high-resolution PDF documents that show a variety of interesting things in Santa Cruz County: the location of every lake, river, and stream, for example, as well as Steelhead and Salmon distribution on a separate biotic resources map. Pretty cool stuff!

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A Buying Opportunity

April 08, 2006

It’s one thing to read national real estate sales statistics, and another thing to read statistics for California. But Real Estate is all really about local markets – what San Diego is doing really has very little, if anything, to do with what’s going on in Santa Cruz. So, how was the Santa Cruz market in March?

Of course, you can always check out the Real Estate Report on my web site – it’s broken down by areas in the county, and provides an overview of the county as a whole.

Today, though, the Santa Cruz Sentinel had a front page article, saying that real estate sales were at a 10 year low in March:

http://www.santacruzsentinel.com/archive/2006/April/08/local/stories/06local.htm

It’s important to read the whole article – it’s a fairly balanced piece, saying that while the sky isn’t falling, there is a lot of inventory out there, and sales are lagging in general. Of course, this could have a lot to do with the fact that while not record-breaking, there was a heck of a lot of rain in March – and February was pretty moist, too!

To me, it feels like there’s a lot of strength in the market. To a seller who has had their home on the market a month or two, and remembers how things were last year this time when homes were selling in 7 days with multiple offers, and selling for over asking price…the market may feel pretty weak. A lot of these sellers are going to be feeling antsy, and may be open to considering offers that are significantly lower than asking price.

Mind you, there are plenty of properties out there that are getting multiple offers, even today. Please don’t think that sellers of prime, well-priced properties are going to sell at anything less than asking price – it isn’t that kind of a buyer’s market. However, it is the kind of market where if there are many similar houses for sale in the same price range, in the same area…the owners of the houses (or condos) who’ve had them on the market the longest…may be (and should be) considering taking a lower offfer.

All in all, this is the best market for buyers that Santa Cruz has seen in years. Although buyers may not always be in the driver’s seat – at least they’re riding shotgun.

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