3 Takeaways from The State of the Market Webinar
Red Oak’s leadership team presented a webinar about the current state of the Inner East Bay real estate market on September 13, 2023. The team reviewed hyperlocal statistics covering supply and demand, changes in financing and the mortgage market, the state of insurance in California, listing prep best practices, and how these factors may affect buyers and sellers.You can register and watch the full recording here. In the meantime, here are 3 top takeaways from the presentation: 1. Inventory is extremely tight The number of new listings that have come to market Jan-Aug is at its lowest level since Red Oak began tracking in 2011. As a result, year-to-date sales are at their lowest level since the local multiple listing service (MLS) went online in 1997. However, buyers remain in fierce competition for the most attractive homes. In fact, homes that sell in the $2M-$3M range sell an average of 20% over list price. Other discussion points included how buyers use contingencies in their offers (hint: they’re almost never used in transactions above $2M), and how the number of disclosure packets on a listing can help predict the number of offers. 2. Mortgage rates are not as high as you might expect Mortgage rates are in the 6-7% range. Although this may feel high, especially when compared to the record-low rates that were offered during the pandemic, they are roughly in line with historical averages. And they are significantly lower than the highs experienced in the 1980s. If the Fed finds that the U.S. is headed towards a recession, they typically lower interest rates, which lowers mortgage rates. This may happen again in the coming months. 3. House prep is critical before listing a property for sale Sellers are able to generate competition for their listing when their house looks great: it’s move-in ready, priced right, and often in the most desirable areas. A critical way to put the best foot forward is to make improvements to the property before it goes on the market. The cost of these improvements has increased dramatically over the past few years, given inflation and the higher cost of construction. Red Oak currently sees clients spending an average of $110,000 to improve a property, but clients have a wide range of budgets, and each scenario is optimized to deliver a 2.5x return on investment. In all cases, clients should work with their agents to understand the best way to move forward. Be sure to capture all of the takeaways in the recording here, then reach out with any questions you may have.
Home Improvements - What Pays Off In The Long Run?
Did you just move into a “fixer-upper?” Maybe you already love where you live and want to stay put, but your household’s needs have changed. Whatever the reason, lifestyle and budget generally determine what takes priority when upgrading or renovating a home. When it’s finally completed, the ideal project maximizes both the value of the house and the enjoyment of it for the occupants! Here are some strategic improvements that align with local preferences based on what we’re seeing in the market. The Kitchen Often at the top of the home improvement popularity list is a kitchen remodel. Because there’s truth in the clichéd notion of it being the "heart of the home," there are practical and functional approaches which optimize that happy warmth. Efficiency and safety upgrades are important to consider. Older kitchens may have inefficient layouts and outdated appliances that are less dependable and energy-efficient. State of the art equipment improves safety, functionality and enjoyment for resident chefs. It’s always essential to address safety hazards like faulty wiring, gas leaks, or outdated plumbing. Enhanced aesthetics also bring a gratifying change. A renovated kitchen can transform the overall look and feel of your home in this well-used focal point of the living space. According to Remodeling Magazine 2023 Cost vs Value Report, a minor kitchen remodel can recoup 71% of its cost at resale and a major remodel recoups 56%. The Bathroom Everyone appreciates a modern and functional bathroom. Updating fixtures, tiling, and overall aesthetics are highly appealing to current residents and potential buyers. Bathroom renovations can also provide a solid return on investment. Remodeling Magazine's report indicates that a mid-range bathroom remodel can recoup around 74% of its cost. Energy efficiency The environment (in addition to the budget) will thank you for reducing a house’s carbon footprint. Given the East Bay region's commitment to sustainability, energy-efficient upgrades are not only popular but also financially rewarding. Energy bills will decrease of course, and the National Association of Realtors agrees that energy efficiency is a valuable selling point. Installing a solar system is also an attractive option. Outdoor spaces The delightful climate in the East Bay provides the opportunity to use the yard as an extended living space. Graceful design and thoughtfully integrated hardscaping can create a refuge for reflection or a setting for folks to gather. The changing climate brings concerns about water scarcity, so replacing traditional lawns with native and drought-tolerant landscaping is a practical and appealing choice. If space allows, an accessory dwelling unit (ADU) or home office is especially suited to expanded households and remote work. What to Avoid Certain projects may not be a good long-term investment, so be aware of over-customization that caters to niche tastes, and poorly executed DIY projects. If you don’t have the necessary skills, attempting major renovations on your own can lead to subpar results that could lower your home's value instead of increasing it. Don’t neglect necessary repairs. Prioritize maintenance and repair tasks over cosmetic improvements. A leaky roof or faulty plumbing can cause damage that only gets worse over time. Homeowners looking to increase their property value should focus on strategic improvements that align with local preferences. By making informed choices, you can maximize your investment while enhancing day to day life. Your Realtor is an excellent resource when it comes to knowing what buyers are looking for in a current market. In fact, Red Oak’s Enhance program will handle the remodeling of a home before it goes to market, and the seller just pays at close of escrow. Learn more here. Red Oak would love to keep you informed about local economic conditions as they relate to current remodeling trends. As you consider the next project, reach out for recommendations and info. We have lots of resources and are happy to share them.
State of the Market: A Red Oak Webinar
Join Red Oak’s leadership team to get the inside scoop on the state of the East Bay real estate market. This information-packed webinar will include helpful material for current homeowners as well as buyers and sellers navigating the current market. We’ll cover hyperlocal statistics and inventory trends, changes in financing and the mortgage market, homeowner’s insurance updates and best practices for upcoming listings, and much more!This free event takes place on Wednesday, September 13th at 6pm. To register and view the recording after the event, visit www.rore.me/EBSOTM_09-23 Note: Also on the 13th, Red Oak is hosting two blood drives earlier that day, one in Oakland and one in Berkeley. Register and learn more here.
Blood Drives Save Lives!
Please join us on September 13th between 9:00am-1:00pm for the Red Oak Community Blood Drive. One of our Red Oak family members recently received a life-saving blood transfusion, inspiring us to to help even more people throughout our East Bay communities. Did you know? Each donation can go towards saving up to 3 people's lives Nationwide, every 2 seconds someone needs a blood donation - that's over 4.5 million Americans every year A single accident victim can require as many as 100 pints of blood Blood and platelets cannot be manufactured - human donors are the ONLY providers - donating blood truly SAVES LIVES! Please consider donating. It’s fast, easy, and has a tremendous impact. Each registered donor will receive a $15 egift card, or if you choose to donate instead, you’ll be entered into a drawing for a $500 Apple gift card. SIGN UP NOW FOR EITHER LOCATION Red Oak · 1575 Hopkins Street, Berkeley · rore.me/hopkinsblooddrive2023 Red Oak · 6450 Moraga Avenue, Oakland · rore.me/montclairblooddrive2023 Questions? Reach out to your agent, or contact us. We’d love to have you join us!
What Are Title Insurance And Escrow Services?
When you buy or sell a home in the San Francisco East Bay, you’ll find that the title company plays many important roles in the transaction. So what does the title company do, and what are their “escrow services?”The title company has several important roles: It issues a title insurance policy for the property that is changing ownership, it holds and maintains the escrow account, and it acts as a neutral third party that facilitates the transfer of ownership.The company provides title insurance, which protects the buyer’s and the lender’s interests in case there are unknown or undisclosed issues that come to light after the sale is complete. It’s not a legal requirement, but lenders insist on it. Even in an all-cash transaction, forgoing title insurance is very unwise!After the seller accepts the buyer’s offer, the agent will open an escrow with the title company (typically of the buyer’s choosing), then the buyer will deposit their earnest money into the escrow account. The escrow officer will be available to answer questions and help everyone involved understand the proceedings. Title Search and Examination During the escrow period, the title company will conduct a thorough title search on the property. This involves examining public records, verifying the ownership history, and any other potential issues that could affect the property's title. Most searches don’t uncover issues, but if they do, common challenges may include: Unpaid property taxes Other tax liens Mechanic’s liens Lis pendens Deeds that were not properly recorded Easements Claims of adverse possession This search may also uncover special building restrictions, encroachments or the existence of special assessment zones relating to sewer districts, other infrastructure or community interests. Some of these are funded by property taxes, so they’re good to know about early on. It’s not unusual to see CC&Rs that have been long forgotten and ignored. It wasn’t until September 2021 that the California State Legislature passed AB 1466, which outlawed discriminatory language in CC&Rs and required local county governments to examine and remove this language. Up until that time racially restrictive covenants, though unenforceable, were shockingly pervasive. It’s important to read and understand the Preliminary Title Report as soon as it’s available. Some of the language can be technical or dense, so consult your Realtor or escrow officer for clarification. Title Insurance Based on the results of the title search, the title company issues title insurance policies. There are two types of title insurance: lender's title insurance and owner's title insurance. These policies provide financial protection in case any undiscovered title issues arise after the transaction is completed. Escrow Services In Northern California, the title company usually serves as an escrow agent, holding funds in a secure account until all conditions of the transaction are met. This ensures that neither party has access to the funds until all contractual obligations are fulfilled. Once the lender deposits the loan funds to the escrow account, escrow closing can proceed. In other parts of California, it's customary for escrow and title to be handled by separate entities. Nationally, these are often handled by attorneys and settlement services. Closing the Escrow The title company coordinates the closing process. This includes preparing, notarizing and completing the closing documents by both seller and buyer. The closing statement will show all the financial details of the sale, the prorations of property taxes, HOA dues and any other periodic expenses. The title company will also oversee the disbursement of funds to the appropriate parties, pay off liens, real estate commissions and distribute proceeds to the seller. Recording When the escrow closes, the title company will immediately transmit the documents to the recorder's office in the county where the property is located. This will officially record the change of ownership in the public record. The title company acts as a neutral intermediary between the buyer, seller, lender, and other parties involved in the transaction. This impartial role ensures that the process is fair to all parties. It’s important to note that, should a dispute arise, the title company has no opinion on how that dispute is resolved. All parties to the transaction must agree before any funds are released. Would you like more information about the escrow process and how it works? Reach out - Red Oak would love to help.
Support Maui's Recovery Amidst Devastating Fires
With the devastating news about the fires in Maui and the growing toll of lives it’s taken, many Bay Area residents will feel this hitting very close to home. We know first-hand how deeply their communities are being affected. Hawaii Life, has a nonprofit similar to Red Oak’s Opportunity Foundation (ROOF) that supports their local communities called Hawai’i Life Charitable Fund (HLCF) which works closely with Hawai‘i Community Foundation. With Lahaina Town and Maui rendered unrecognizable, many of their community members displaced and their livelihoods stripped away, Hawaii Life has pledged to match funds donated to HLCF up to $50,000 in support of the “Maui Strong” fund. Any amount will make a difference in providing resources for disaster preparedness, response and recovery for Maui. If you’d like to join in supporting Maui, please consider donating now.Video: Maui Strong Blog
Montclair FREE Movie Nights are Back - Join us!
Saturday, August 19: Dungeons & Dragons: Honor Among Thieves Saturday, September 9: Ferris Bueller’s Day OffWe’re excited to announce that Red Oak is bringing back FREE Movie Nights in Montclair! Bring your beach chairs, picnic blankets, and beverages and claim a spot as we project movies for all to enjoy. Local businesses are helping to sponsor the event with CRUfit supplying the popcorn, and Yellow Door, Daughter Thai, Crogans and more local businesses providing additional refreshments and items for purchase. The parking lot opens and music starts at 7:00pm and movies begin at dusk, 8-8:30pm. The events take place at 6450 Moraga Avenue, Oakland; enter on Medau in the Red Oak parking lot. Hope to see you there!
What’s It Worth? Basics Of The Real Estate Appraisal
In residential real estate, an appraisal is an estimation of a specific property’s fair market value. As part of a real estate transaction, it assures the buyer, the seller and the lender that the agreed upon purchase price is fair. Since Red Oak is engaged in selling and buying real estate, the focus here is on how appraisals function in transactions. They’re also used in a number of other circumstances ranging from a mortgage refinance to divorce and estate settlement.It’s important to note that value is not the same as cost or price: Cost is the dollar amount needed to build or buy the exact same property in the current market Price is what a buyer actually pays for the property Value is what the appraiser believes a buyer would be willing to pay for the property based on their evaluation According to the California Department of Real Estate, the appraisal provides “the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.” If a buyer needs a mortgage to buy a home (or even if they're paying cash), their agent will probably suggest including an appraisal contingency in the sales contract. This allows the buyer to walk away if the appraisal comes in below the agreed upon purchase price. Based on Red Oak’s internal data, appraisal contingencies are used at all price points, but are more common in transactions with a sale price under $1M. THE PROCESS In compliance with the Dodd-Frank Act, your chosen lender will be the one to initiate the appraisal process. The appraiser must be appropriately trained and licensed by the California Bureau of Real Estate Appraisers. Just like most services, the length of time it takes to complete the report will depend on the appraiser’s workload and the complexity of the assignment. In the East Bay, all those involved understand that this is time sensitive. The appraiser will visit the property, inspect the interior and exterior, take photos, measure the square footage, evaluating the home's features, fixtures and overall condition. They will then research recent comparable sales (comps). A minimum of 3 comps should be included. They should be homes that sold no more than 6 months prior, be located in the same neighborhood and be similar in size and condition. THE APPRAISAL REPORT INCLUDES: A street map showing the location of the subject property and comps used A parcel map showing property lines and measurements A floor plan with measurements An explanation of how the square footage was calculated Photographs of the home’s exterior, interior rooms, and street Front exterior photographs of each comp Any other pertinent information such as market sales data, public land records, and public tax records that have been used The appraiser provides an analysis and conclusions about the property's value based on this data, but an accurate appraisal is both science and art. The appraiser then adjusts the subject property’s valuation relative to the differences in the comps. Personal judgment and even intuition can’t be completely eliminated in the appraisal process, and this is one more reason to work with local experts. When the appraisal comes in at or above the purchase price, an important milestone has been reached on the way to home ownership! WHAT IF THE APPRAISAL IS LOWER THAN EXPECTED? A low appraisal is not an uncommon glitch, especially in a rapidly changing market. Depending on the specifics, the buyer’s agent may be able to negotiate with the seller’s agent to lower the purchase price. The buyer may come up with the difference between the contract price and the appraised value or they may decide to exercise that appraisal contingency and cancel the sale. The agent can also help the buyer challenge the appraisal by presenting additional comps or other data to support a higher valuation. In some instances, it may be appropriate to work with the lender and find another appraiser with more local market awareness for a do-over. It is sadly necessary to point out that appraisals can be affected by bias. Anyone who thinks they have encountered such a dubious situation, should speak up immediately! The appraisal process is one of many real estate complexities. At Red Oak we endeavor to educate, simplify and guide our clients through the maze. If we can clarify or help interpret information, reach out, we’d love to help.