There are some astronomical prices being paid right now for waterfront homes along the Monterey Bay.  Despite some of the doom and gloom stories you read, waterfront homes continue to change hands quickly.  Why is this?  When “Location, location, location” means “Waterfront”, the sky’s the limit.

Waterfront Property Weathers the Downturn
It might not be a bargain, but waterfront property's a safe bet when it comes to real estate investments that pay off, even when the housing market isn't so hot.

David R. Indermill of Penny Realty-Re/Max Coastal Properties near San Diego, Calif., has sold $60 million worth of beach real estate in the last nine years. Here is some of the key advice he offers clients are looking for the best waterfront value for their dollar:

• For oceanfront property, expect to pay as much as $2,700 per square foot for prime locations. Even if the home is a few blocks from the beach, it can cost $500 to $600 per square foot.
• Parking is golden. If you're buying a condo, don't settle for one space; buy a second even if it adds $20,000 to $75,000 to the price, because on-street parking is scarce and a hassle.
• Expect loud parties, especially in the summer.
• Small living spaces are par for the course. Rooftop decks can maximize the space available.
• Flowers and trees are a big plus for buyers. Curb appeal sells and landscaping can make or break a house.
• If it’s broke, fix it. Make sure the homeowner association maintains a generous budget for upkeep, as salty sea air and sand can cause problems for the structure. If you’re on your own, expect to spend annually for minor repairs or you’ll pay much more later.
• Restaurants increase value. Good nearby restaurants and entertainment attract people.
• Good management pays off. Any owner who expects to rent the property for part of the year should budget for a top-notch management team that takes care of the property and doesn’t put up with lousy tenants.

Can property sellers cut agent's commission for poor service?

DEAR Patti: Can we fire our real estate agent? We (and four others) are in the process of selling our property to a commercial buyer. Our agent never shows up for meetings and is so out of the loop. He calls us to see what is going on with the sale. We don't think he deserves the 6 percent sales commission because his involvement ceased after finding the buyer. We want to fire him, or at the very least, cut his commission. Can we do that? --Harrison Y.

DEAR HARRISION: No. If your real estate agent has a valid exclusive right to sell, exclusive agency or open listing and he or she is the "procuring cause" of the sale, or found a "ready, willing and able" buyer, but you owners took control after that, the agent is still entitled to the agreed 6 percent sales commission.

When the sale closes, if you refuse to pay the full sales commission, the listing agent can sue for any unpaid commission. Just because the agent doesn't attend meetings of the sellers is no reason to deny a sales commission for producing an acceptable buyer. For more details, please consult my local real estate attorney Ernest FOX. Call me for phone nunmber.

Can neighbor cash in on real estate sales commission?

DEAR Patti: Our elderly neighbors were selling their home. It was listed for sale with a local agent. My husband and I told some friends about they house. They wanted to inspect it immediately. I coordinated with our elderly neighbors for a walk-through inspection and then put them in touch with the listing agent. The sale went through without the agent ever having to show the house. Aren't we entitled to part of the sales commission? – Robin L.

DEAR BOB: Legally, no. Morally, maybe. Unless you are a licensed real estate agent who represented the home buyers, you are not legally entitled to receive part of the sales commission.

However, in many states the listing agent could pay you a "finder's fee" for referring the buyers. I hasten to add finder's fees are not legal in all states.

Finder's fees are whatever the parties agree upon. Certainly, you are not entitled to half of the sales commission. But a sharp listing agent, if finder's fees are legal in your state, should offer to pay you $1,000 or so, depending on the gross commission she received. At the very least, the listing agent should have given you a lavish thank-you gift.

California Proposition 8

In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when a property suffers a "decline-in-value."

A decline-in-value occurs when the current market value of your property is less than the current assessed value as of January 1. If you disagree with the assessed value of your property, you should contact the Assessor's Office to request a review of the value.

If the matter is not resolved to your satisfaction, you may then file an appeal with the Assessment Appeals Board.

SANTA CRUZ — Despite a real estate slowdown nationwide and the growing numbers of county homeowners missing their mortgage payments, one segment of the Santa Cruz housing market is buoyant: high-end homes.
Six homes in Santa Cruz County sold for more than $2 million in June, matching the number of $2 million-plus sales in April.

View a map of the six homes sold for more than $2 million in June.

Case in point: a 4,250-square-foot home with an ocean view and a wine cellar in the gated community of Monte Fiore in Scotts Valley sold for the listed price: $2.25 million. "There were three interested parties and it was more of a race," said Mark Oliverez, a real estate agent with Alain Pinel who represented the seller and the buyer.

In fact, of the 164 sales in June, 40 were for $1 million or more, a higher percentage than in May. The high-end market phenomenon gained attention last week in The New York Times, which reported that sales of homes priced at more than $1 million are up in Boston, New York and Miami.

In Santa Cruz County, affluent buyers are willing to pay higher prices for ocean-view homes.

June statistics

Single family homes
Sales: 164
Listings: 1,292
Unsold inventory index: 7.9 months
Median price: $757,000

Condos
Sales: 32
Listings: 289
Unsold inventory index: 9 months
Median price: $560,000

Source: Real Options Realty

The increasing number of high-end sales in Santa Cruz County is keeping the median home price high, at $757,000 in June, a barely perceptible dip from $760,000 in May. But the number of overall sales is down in comparison to the red-hot market of three years ago, when more than 250 homes sold in June. This year's June sales, 164, are the fewest since 2001, according to Gary Gangnes of Real Options Realty, who compiled the monthly statistics. The current housing inventory is at a 10-year high with 1,292 listings.

For those hoping more for-sale signs saying "reduced" would mean the median sales price would fall into the $600,000 range, it's just not happening. In many parts of the county, asking prices are high. The average listing price is more than $1 million in Aptos, Capitola, Davenport, Santa Cruz, Scotts Valley, Soquel, according to Gangnes, although he cautioned that listing prices do not reflect sales prices.

Sales of pricey homes rebound

April
Median sale price: $774,375
Number of sales: 128
Sales over $1 million: 35

May
Median sale price: $760,000
Number of sales: 147
Sales over $1 million: 27

June
Median sale price: $757,000
Number of sales: 164
Sales over $1 million: 40

Source: Real Options Realty

Ocean-view homes, and those within walking distance of the ocean are selling for more than $1 million, longtime agent Tony Aprile said. Patti Boe of American Dream Realty said she was too busy showing homes to have an extended conversation Friday. "I have seven escrows," said Boe, who was involved in two of the six $2 million-plus sales in June.

Kelley Trousdale, who sold a Rio del Mar home in June for $4.5 million, said high-end buyers tend to be people from the Central Valley with disposable income and a yen for a second home with a beachfront. Other agents said high-end buyers include local residents. The buyer of the Scotts Valley home was trading up from a property in Felton, but one of the other prospects was a New Yorker who had sold a business and wanted to move back to Santa Cruz.

Frank Murphy, who represented a buyer who paid $2.5 million for an ocean-view home on the Santa Cruz Westside on Refugio Road, said his clients lived in Santa Cruz but wanted acreage close to the city. Murphy also had a San Mateo prospect who has sold a business and was looking for the right location for a family compound. Two deals fell out of escrow when flaws in the property came to light, and the client ended up buying in Sebastopol.
That's typical for a high-end shopper.

"People can afford these homes and they don't want to settle or compromise," said Oliverez, using the word "cherry-picking" to describe the market. That's why Aprile went to the trouble of bringing in Erin Blackburn to "stage" the Refugio Road home, which was otherwise vacant.
"It's almost a requirement in this market," Aprile said. "When they see the furniture they tend to slow down"

Victoria Pendorf represented the Napa Valley buyer of 302 Cherry Ave. in Capitola, which sold for $3 million. She called the ocean view "amazing — you don't want to leave" The Napa Valley buyer is in the "pre-retirement" crowd, a demographic that could generate more high-end buyers.

The Silicon Valley tech rebound is another factor in the high-end market.
Oliverez mentioned a client who came from Arizona to work in high-tech and bought a $2.6 million home in Los Gatos. "You're not seeing layoffs, you're seeing hiring," he said. "Relocation buyers are out there"

Contact Jondi Gumz at jgumz@santacruzsentinel.com.
Copyright © Santa Cruz Sentinel. All rights reserved.

1. COUNTRYWIDE ACKNOWLEDGES HOUSING MARKET WOES
   On July 24th Countrywide Financial acknowledged that the housing market "might not begin recovering until 2009 because of a decline in house prices," and that even borrowers with good credit are starting to fall behind on their loans. This announcement triggered a sell-off in the stock market, and signals a shift toward a more skeptical view of the future of the housing market than that to which many executives have previously held. According to Vikas Bajaj of the New York Times, Angelo Mozilo, Countrywide's chairman and chief executive, said that "because of a large number of homes on the market, the housing sector would continue to suffer until sometime in 2008 and not begin recovering until 2009."
   
   As a result of the downturn, major lenders such as Countrywide, Wells Fargo, and others have stopped offering risky sub-prime mortgages. But it isn't just sub-prime borrowers who are struggling with payments. Even "credit-worthy" customers are showing the potential to default as home prices fall. "Countrywide said about 5.4 percent of the home equity loans to customers with good credit that it held an interest in were past due at the end of June, up from 2.2 percent at the end of June 2006."
   
   To read the article in its entirety and see detailed statistics, go to Top Lender Sees Mortgage Woes for ‘Good’ Risks

You mean there are Cheap agents in Santa Cruz? No way:)

Real estate company web sites and the obituaries

Lenders, Schmenders! the Growing Subprime Mess   
 

Asa past promissory note lender, I know what foreclosures can do to a bank (in the eyes of their regulators) and to a community.  The increasing numbers of foreclosures observed in our marketplace ultimately means that lenders will tighten lending guidelines and mortgages will be harder to obtain, causing home prices to decline.  This is particularly true in the lower range of home values.

Here are some links to brochures produced by the National Association of Realtors that address the growing subprime mess and the changes in the home lending industry.
CNN: "Looking for Ways Out of the Subprime Mortgage Crisis"
USA Today: "Neighborhood Finds Real Estate Loans Too Good to Be True"
Washington Post: "Foreclosure Rate Hits Historic High"
I've all seen the headlines. What consumers need now is a lifeline.

1. Download my newest brochure, "How to Avoid Foreclosure and Keep Your Home," which provides outstanding information for existing homeowners who may not be able to afford their current mortgage, including phone numbers, counseling services and just plain good advice. Download here.
2. Download the brochure, "How to Avoid Predatory Lending" and use it to help prospective homeowners avoid unfair lending practices. Download here.
3. Visit NAR's subprime Web page for additional information on this growing problem and plenty of great resources for you and your clients. More info here.

These are practical, user-friendly resources that you can use in the field to help prospective and current homeowners keep their homes - and build wealth - for the long term. Again, visit the subprime Web page to order copies of these brochures. 

REALTORS® help build communities one home at a time. I know that foreclosures can decimate our communities and our businesses.