The San Diego Home Blog

“Junk fees” we often hear them called. Those are all those fees that the buyers and sellers pay during the transfer of real property. Buyers and sellers alike groan over the need to pay the final tab, and the complaint I hear most often relates to the charge for Title Insurance.

In San Diego and in most cities, it is the seller that pays for the preliminary title report (PR), with the buyer responsible for obtaining additional coverage for their lender. A preliminary title report is a document that is intended to identify situations which may “cloud” title to a buyer’s new home. These situations might include outstanding taxes or assessments, easements, liens, and encumbrances. The PR will also identify anyone with special rights to the property (such as Crazy Uncle Bob who loaned the seller $14.72  twelve years ago and consequently appears on the loan and the recorded deed). The preliminary title report then becomes the final title report at closing, where the foregoing conditions become exceptions to title and therefore exclusions from the buyer’s title insurance coverage. 

In any real estate transaction, the buyer’s acceptance of the title report is a contingency of sale. Therefore, it is incumbent on the buyer, with the help of their agent, to review, understand and accept the report’s findings within their contractual due diligence time frames.

Seems pretty simple, yet it is astounding how few people actually take the time to read and understand this document. I do not blame the buyers for this; they are typically ear-deep in confusing fine print paperwork when the PR lands in their lap. Conversely, I blame their agent for not reviewing the PR carefully for any issues of potential concern. We are supposed to understand the reports when our clients may not. That it precisely why it has been our policy (Steve and me) to initial every page of our copy of the PR before filing it away; it gives evidence that we have touched every page, and therefore forces us to read and understand it. Call it accountability.

Now for our latest real-life example of how the information contained in the PR can be of consequence and material to the transaction. This is Steve’s example, actually. He was representing a client in a home purchase here in San Diego. To the client, one of the big appeals of this particular home was an unusually large side yard. (We are talking “large” in San Diego terms, so don’t get too excited). A week into the transaction and during the contingency phase, the buyer, who currently lives in another state, flew in for the property inspection. Steve dutifully scurried to make sure that all disclosures were available with the intent of dispensing with all of the disclosure “formalities” during the buyer’s brief visit. While reviewing the PR prior to meeting with the buyer at the property inspection, Steve noticed an innocent little dotted line running along the side yard on the plat map: An easement. Now, easements by their very nature are not evil. It simply signifies that someone other than the underlying property owner has use rights to a portion of the land. We see them all of the time, and they can be blanket easements (non-specific, for instance those dealing with utilities) or specific, as was the case here. This one happened to be a sewer easement. Again, not a big deal, except…

The buyer wanted a pool some day, maybe. They admitted they might never build the pool, but then again they might. One of the conditions of your typical public easement, however, is that no permanent improvements be located within the easement boundaries. If the city needs to get in and replace a pipe some day, they obviously don’t want a guest house in the way. The bottom line is that Steve immediately summoned the buyer and pointed out the issue, knowing that the transaction was toast. It was his fiduciary obligation. The bad news was that the buyer was into the process for one very expensive plane ticket and a lot of time and energy. The good news was that he didn’t end up owning a home that didn’t offer a feature important to him - room for a pool.  Six hundred dollars or six hundred thousand dollars? I think it turned out to be a small price to pay, and that is precisely what a buyer contingency period is for.

In reliving the events leading up to the revelation, Steve and I had lengthy discussions about how or if this could have been avoided. Ironically, the buyer was grateful, saying he didn’t pay any attention to the PR himself and would have never known about the easement issue had it not been pointed out. Should the listing agent have known? Certainly the seller should have disclosed this up front. But absent a seller disclosure, the agent would have to smell something fishy, and it simply wasn’t that obvious (not all large yards involve something sinister). Should Steve have known? For the same reason, probably not. I think all we can learn from this is that the system worked, and one man’s “junk fee” is another man’s treasure.

Zonies! As a San Diegan, you know them. They are the ones that clog our freeways and beaches during the summer months. They are the ones we blame for all of our June through August overpopulation woes. You recognize them by their shoes, the rubber soles having been melted away by pounding the scorching Arizona blacktop to get the *&^%$ out to more habitable temperatures before the mecury reads triple digits. Now I ARE one! Well, at least an honorary one.

Greg Swann of Bloodhound Blog fame recently invited me to join his project as a contributor. If you are reading this, you know I have been a long-time fan of his work. His commentary is taxingly prolific, often fiercely biting, and always hugely entertaining. The caliber of the others who now comprised his consortium of contributors is top-notch as well.

So, having made my acceptance speech, I now have two outlets for my blogging addiction. Won’t Steve be pleased!?

 There is a pretty cool new entry into the heat map game. Neighboroo gives statistical data for areas including income, crime rates, school rankings, political affiliation and other demographic data. The zoom feature is somewhat limited, not really allowing you to hit your target neighborhood using the interactive map feature. Enter a zip code into the search bar, however, and voila! Here’s what I got for my zip code. Note that the median age is deceiving, since I have dramatically skewed it.

 We live near open space, so we have critters. Steve declared a one-man assault a couple of years ago on the bunnies that were trashing his back lawn. Note I say “his”, because the natural order of things prescribes that the man of the house attend to the manly tasks such as plumbing, electrical and landscape maintenance, leaving the woman to nest, hunt and gather (read: hire a housecleaner and visit pizza hut online). So, back to Steve’s war on terrorism. He swiftly built a chicken wire-contained compound that any military installation would envy. The entire perimeter our tiny backyard, or as we call it in California, “acreage”, was soon protected with an attractive mesh barrier to keep the killer rabbits at bay. Unfortunately, the wily critters were motivated, and we can count several on any given morning dining on a buffet of crab grass. I have nightmares involving green beret donning furry creatures being air dropped into our enemy territory.

Most recently, Steve decided it was time to return our back lawn to its former glory once and for all. Forget the fact that my 100 pound puppy, Simon (who has the cognitive skills of a Pet Rock), has all but assured that no grass will grow here again. And my husband, being the big fan of value-engineering, decided on seed rather than sod. My reseeded yard (notice it is mine now) is home at this moment to at least twenty delightful, well-fed birdies.

So what does this have to do with real estate? It proves that desire is a motivater. There are yards that are less the fortress than mine at present, but for some reason the consumers (of our lawn, in this case) like ours best. And they will come.

The market is slow. It is slow from a cyclical perspective and slow from a seasonal one. I hear both arguments on an almost daily basis. “Shouldn’t I wait until Spring when things are more active?” Sure you may enjoy a market with more buyers actively looking, but you will also find many more homes listed which you will compete with. “Aren’t the holidays a bad time to list my home? It is a slow time of year.” Yep, slow indeed. But, second to June/July, Steve and I historically sell more homes in December than any other month, and this year is shaping up to be no different. We attribute this to quality over quantity. If I am seeing your home during the second week of December, I must mean business, since I have so many other, personal commitments competing for my time. I am motivated! As a seller, fewer potential buyers simply means fewer casual shoppers. Waiting to list may mean you miss being exposed to the buyer who is actually looking to buy your home, regardless of the time of year.

Personally, our numbers of showings on our listings are down - Way down. The phones are ringing only infrequently this week. Curiously, however, our online statistics reveal much higher traffic for our listings than over the past several months, including Realtor.com and our website. Our showing traffic in the past seven days: One showing (for all of our listings), and one resulting offer/sale. Statistically speaking, pretty darn dismal. For that one seller, not too shabby. Why did this one home sell, and after a mere week on the market? For the same reason a home sells any month of the year; the buyers were serious about making a purchase, and the home showed well and was priced attractively. In short, their grass was greener and nothing, not even the impediments of the holidays, was going to keep the hungry buyer away.

I’m back, bearing good tidings and random musings. With a residual hacking cough but a new lease on life, I’m back from the depths of the Martian Death Flu (MDF). Our annual Thanksgiving trek to our cabin in Lake Arrowhead was somewhat less productive than I had hoped (no killer blogging, no finalized business plan for 2007, and no hikes in the woods). A big shout-out, however, to the makers of Kleenex. As we were preparing for our departure yesterday back to reality (and for me, back to the world of the living), the dog of course threw up what at first glance appeared to be random squirrel parts but, alas, was only the remnants of the Thanksgiving leftovers. Ahh, the holidays.

I knew I was in for a project when I finally got back to the feedreader, and Greg at the Bloodhound did not disappoint with 68 new posts I had missed during my brief walk with death. At least he missed me. No offers to be the Union Tribune’s new humor columnist, I’m afraid, but we did indeed log a small pile of contracts during my dark days, Greg. Thanks for giving me a little more credit than I deserve. I was actually somewhat surprised at the number of people who thought my absence was due to something sinister or intriguing, such as foul play. Unfortunately, there is no glamour in the MDF.

I knew I was on the comeback trail when Steve and I spent our last night of “vacation” guffawing over the Lake Arrowhead Homes and Land ads. Oh sure, we could have devoted our precious last moments on the deck of our falling-down-cabin in awe of nature and feeding the squirrels, but I suppose real estate agents are just wired differently. For our far-away cyberbuddies, Lake Arrowhead is a little-ish resort town in the San Bernardino Mountains. A mere twenty minutes from San Bernardino and halfway up the hill to Big Bear and the ski resorts (assuming it gets cold enough this year to make snow), Lake Arrowhead is a funny animal. In San Diego, any Realtor from San Bernardino county can join our Board, view, show and sell properties in our county. But, in Arrowhead, there is no reciprocation. Their Board is a closed system, so unless you hang your license on the hill, you are at the mercy of the local agents. Steve says this is a self-preservation practice; being a community of primarily second-home owners from San Diego, Orange and Los Angeles Counties, local agents would starve in a world of free enterprise. I say this smacks of eliteism. Even the lake is private. Sure, anyone can look at it (no fines for that that I am aware of), but unless your home is within the “lake rights” boundaries, you will not be floating a boat or dipping a toe in. Whatever it is, the 21st century is seeming to pass them by. You can Google all day, but you will not find a single decent website or any blog of Lake Arrowhead origin. Search Realtor.com, and I challenge you to find more than a handful of visual tours or a smattering of listings with the full complement of photos.

But, there is always Homes and Land. Our favorite compelling ad for home loans shows the lender surrounded by his large family (I can only assume those children belong to him) at a bowling alley, and they are all proudly posing with their bowling balls. Now, that’s the guy I want securing my financing. There are the competing real estate companies with ads where all of the agents are either in red polo shirts (the red team) or the blue shirts (the blue team). There is the top producer who looks like she applied her makeup with a sling shot and had her hair styled by angry beavers. We think we would like her. Then there is the ad copy. One full-page spread for a $5 million dollar lakefront had a beautiful photo of what was described as a “Conservation Wet Bar”. Steve and I discussed our low-lander ignorance. Is a conservation bar one that uses low-flow technology? Or maybe the bar itself was constructed of rain forest woods. Whatever it is, we decided we deserved one of those guys. (Editor’s note: It occured to the Editor during the second glass of Chardonnay that it was in fact a “Conversation” bar. Never mind. Don’t really need one). By the way, the photo of the “Conservation” bar, obviously carefully staged and professionally shot, featured a cardboard Kleenex box in the center. Even the rich can succumb to MDF, I guess. Another home advertised as “perfect for the Jetsetter”, this carrying a $10 million price tag, promoted a “hydrolic” lift. Apparently Jetsetters don’t mess around with unnecessary vowels. But they do own Thesauruses. This home was “an amazing edifice”. Edifice? I know it means building, but I am not entirely convinced I want to own an edifice. It just sounds yicky.

So, during our trip to the local Starbucks (yes, they do have one of those!), we had a good chuckle, being the big-city folk, over the man who grabbed a cup sleeve for his ice-cold frappacino. My youngest daughter thought this was particularly amusing… until I got her home and had to peel her frozen fingers from her own, fortunately with most of the skin intact. Guess we aren’t so smart afterall. It’s good to be home. I’ll be going back to work today to see if I can sell a couple of edifices.

(I’ll leave you with this, reprinted without permission, a post by Russell Shaw. For mature audiences only).

To the six people who may actually read our blog, I apologize for my extended absence. I am nearly back from the abyss. Day fifteen of the Martian Death Flu (MDF), and I am showing some signs that I may live through this thing. Fortunately, the MDF germs are selective, and they spared the rest of the nuclear family (as of this writing). I have an albeit congested head full of things I want to write about, but I’m going to save that for after the holiday. Instead, in the spirit of Thanksgiving (and inspired by the Bawld Guy’s seasonal post), I’ll offer my short-list of thanks. And Jeff, if you are reading this, your new-and-improved blog, while visually enhanced, is blocking my comments as spam. I will assume that this is a software glitch and not a sign of superior intelligence.

So, in no particular order:

• I am thankful for my family, of course, and for their health. By Saturday I hope to be thankful for mine.
• I am thankful for my job that, for the most part, doesn’t feel like a job at all. I am fortunate enough to have found a career that I enjoy. It is rewarding and challenging, and even pays the bills. I suspect if I ever reach the stage where I can afford to retire, I will resist - at least until I am no longer able to lift the open house signs into the back seat.
• I am thankful that my oldest daughter is likely only going through a phase, and my little self-proclaimed vegetarian will be eating turkey again by next November - in time for the release of my new best-seller Tofu and a Healthy You. In the meantime, I am thankful it hasn’t occurred to her that the chicken broth I use in many of her vegetarian side-dishes is actually derived from (gasp) chickens!
• I am thankful that I have two more last chances at 40-something and, MDF aside, that my daughters’ future children may actually know their grandma (having lost my own mother when I was 21).
• I am thankful for TIVO.
• I am thankful that my children are bright, motivated, and compassionate individuals who will do great things in life, even if those great things do not involve laundry or room-cleaning.
• I am thankful for Broadband Wireless, allowing me to write this from the deck of our little mountain cabin.
• I am thankful for our little mountain cabin.
• I am thankful for our home, complete with clutter, deferred maintenance and enough dog hair in the carpet to make a new dog. In 3 1/2 years my last “baby” will leave for college, and I will have too much time to clean and redecorate when that happens. So, in the meantime, I will be thankful for the daily “Where did you put my shoes?”… “If you put them away, they wouldn’t be lost” arguments.
• I am thankful that my daughters don’t know poverty and for the fleeting moments when I sense a flicker of recognition that they know they are blessed.
• I am thankful that the Three Musketeers (Steve and the girls) didn’t fall off of Half Dome during their backpacking trip this past summer. I am mostly thankful that they didn’t make me go. (The appeal of putting your house and all of your essentials on your back to spend four grueling days expending precious energy walking straight up a mountain with no indoor plumbing, elecrical outlets, or Starbucks in sight simply escapes me when there are perfectly good accommodations available in Las Vegas).
• I am thankful that, through fancy footwork and fast talking, I have logged one more year where I have avoided Steve’s dream of taking a family cross-country road trip to see, among other things, the World’s Biggest Ball of Twine and the Iowa cornfields in all their glory.
• I am thankful for a husband who has tolerated me for twenty years. While you may find this incredulous, I am not always a picnic. While admittedly charming, delightfully witty and somewhat well-preserved for my age, I admit I can be a teensy bit controlling and bossy. And I have backed through the garage door twice. And I backed into our daughter’s car in the driveway last summer. And there was that time I vacuumed up the dog’s tail.
• I am thankful for pre-cooked turkeys.

HAPPY THANKSGIVING!

A few days ago, Roger Showley, a veteran real estate writer for the San Diego Union wrote an article about how the San Diego real estate market may be starting to stabilize. It was disappointingly superficial. Kris wrote a fabulous blog HERE ”undressing” Roger for the shallow nature of the article and identified several areas of deception. Had Roger done just a little more research, he could have presented a much more meaningful and accurate picture. But the thing that got me was his reference to the premise that even though the market may be starting to stabilize “…agents shouldn’t be popping the corks off of champagne bottles, yet…”. This comment was of no relevance to the remainder of his article, but it demonstrated once again that the author, for some reason, has an anti-agent bias. In order to fully appreciate this comment, one must only go back about two years to another Roger article where he used a lot of column space to basically rail on the issue of the amount of money agents were earning (too much, apparently, in his opinion) with barely a word describing the value we bring to a transaction. That article was riddled with numerous inaccuracies and assumptions, none of which would have occurred if, once again, he had just done his due diligence. I’m certain he got an earful from numerous agents, but he never followed up with corrections to the article.

So, why do I care? Because as a journalist, one might think that Roger would be a bit more concerned about a much bigger issue that his most recent article revealed, rather than how I pay my bills and try to save money to send my kids to college someday. You see Roger, I don’t drink champagne!

The BIGGER issue is this - According to SANDICOR, for the period 1/1/06 through 10/31/06, there were 5,533 fewer sales in San Diego County than for the same period in 2005. Rather than write about when agents may drink their champaigne Roger, you might want to write about what this means in a macro (that means “BIG”, Roger) sense to the local economy. Since you apparently have “writer’s block” after possibly too many years at your desk, here’s a sampler for your next article. The loss of sales this year translates roughly into:

1. $193 milllion-$232 million in lost brokerage/agent commissions;

2. $38.7 million in lost escrow and title revenue;

3.$20-$30 million in lost loan fees;

4.$2.2 million in lost appraisal fees;

5.$2.5 million in lost home inspection fees.

So, maybe a $300 million hit to the San Diego economy (so far this year) isn’t as interesting to you as what I and my colleagues try to earn to pay our bills. But it’s not just the agents (thousands are effectively unemployed now) who are getting hurt by this reduction in sales as our market softens. There are also thousands of hourly wage employees who work extremely hard and are critical to each and every transaction working for real estate companies, escrow and title companies, graphic design and printing firms, etc., etc., etc. who have lost income or jobs or whose jobs are now in jeopardy. Add to that the reduced work and income of the plumbing, electrical, roofing and other contractors who do the home repairs when a sale occurs. So let’s add another $15-$25 million to the lost revenues for these folks. Oh, and while we’re at it, we should calculate the lost tax revenues and other “trickle down”  impacts to the government as well as retailers, auto sales, home improvement stores, furniture stores etc. resulting from this real estate downturn. But, I guess I’m just too lazy to do all this research. After all, I am not a journalist!