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On May 14, 30 members and guests of the Silicon Valley Association of REALTORS® attended “Doing Business with Mexico” and celebrated Cinco de Mayo afterwards with Mexican delicacies. With Global Business Council (GBC) Chair Mark Wong and GBC member Sara Spang both moderating, panelists shared valuable information about both inbound and outbound transactions with clients from Mexico.
Panelists included Nancy MacLeod, a real estate broker/owner of Homes2Buy.com, who owns a villa in San Miguel de Allende, Mexico, where she also represents buyers from the U.S.; Alicia Sandoval, a REALTOR® with Keller Williams Realty in Palo Alto and a native of Mexico; Amber Neil, a REALTOR® with No Borders Realty in San Jose, who has dual U.S. and Mexican citizenship and has been doing business in Mexico and California since 2006. Another panelist, Sal Covarrubias, sales manager for First American Title Company, discussed title vesting concerns, proper identification needs for sellers, and the differences in holding title between the U.S. and Mexico.
The REALTORS® said the best way to tap into the Mexican market is to join AMPI (Asociación Mexicana de Profesionales Inmobiliarios), the largest real estate association in Mexico. Join the organization as an affiliate and attend their conventions and events.
AMPI has ties with the National Association of REALTORS® and is strongly advocating for the licensing of real estate agents in Mexico, because right now, anyone can be a real estate agent there. Travel and networking is key to learning more about the real estate business there and AMPI would be a good source, they said.
Covarrubias said issues regarding Mexicans buying property in the U.S. are similar to that of other foreign buyers. “Timing is important and whether the foreign buyer will be personally present at closing. Also, agents need to verify their client’s legal name. It may not matter much when the client buys the house, but it will matter when it is time for that client to sell the property,” said Covarrubias.
Transactions can take months to conclude in Mexico so Mexicans who buy property here get culture shock when the process is quick, and they can close as soon as three or seven days. Also, there is no disclosure when buying property in Mexico, so REALTORS® need to take time to explain to their Mexican clients the transaction process in the U.S. “Mexicans are very social and want to get to know you personally first before deciding to do business with you. They value social graces, mannerisms and respect,” said Neil. “And they are not keen on email or text. They want one-on-one, eye-to-eye conversations with you, and many meetings.”
Like any country, there are places that are dangerous, but MacLeod said, “Mexico is still very safe, especially the tourist areas and places like San Miguel de Allende.”
Sandoval said while payoffs were prevalent in the past, business there is now done in a more professional way.
Lastly, don’t believe you have to sign a 99-year lease and can’t own property in Mexico. “I’m not sure where that myth came from,” chuckled Neil.
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Over 100 members attended Wednesday’s Los Gatos/Saratoga District meeting and listened to longtime appraiser Roger Miller from Taketa, Miller & Associates. Miller’s message was one of “guarded optimism” regarding 2011, but he is especially positive about this spring.
Appraiser Roger Miller
“Things are starting to turn around,” Miller remarked, and proceeded to share his data.
* At this time last year, there were 95 listings in Los Gatos; as of Tuesday evening, Miller indicated there were 111. A year ago, Saratoga had 73 listings; as of Tuesday night, it had 71.
* Pending sales in Los Gatos at this time last year were 39; they are 43 this year. Saratoga had 20 last year; it has 36 this year.
* 2010 home sales were up in Los Gatos 22 percent from 2009; Monte Sereno, up 42 percent; and Saratoga, up 25 percent.
* Homes priced at two million dollars and under are in a very strong market – 92 percent of last year’s home sales in Los Gatos were under $2 million; Monte Sereno, 65 percent; and Saratoga, 81 percent.
If a listing is under $2 million, if it’s priced right and in the Los Gatos school district, it will sell in one to two months or less. “If your listing is under a million (dollars) in Los Gatos and it hasn’t sold, there’s something wrong,” Miller told REALTORS®.
There is no question prices have dropped, some by as much as 20 percent, and others more, depending on the area. Miller said a home bought at the end of 2007 or at the beginning of 2008 would sell roughly for the same price today.
If there are many foreclosures and REOs in a neighborhood, the market will certainly be affected. This is not much of an issue in the Los Gatos area, according to Miller. There continue to be multiple offers in Silicon Valley – one home just received six offers recently. There are also a number of high-end homes that have sold in the $4 million and above range in Woodside, Atherton and Los Altos Hills.
Miller advised REALTORS® to always do a true history on comps and always check the absorption rate. In Los Gatos, for homes priced between $1 and 2 million, the absorption rate is three months; between $2 to 3 million, seven months; between $3 to 4 million, seven to10 months. In Saratoga, the absorption rate for homes priced under $1 million is one month; between $1 and 2 million, two months; between $2 and 3 million, eight months. Between $3 and 4 million, 5.5 months.
Miller said REALTORS® should NOT have to deal with out-of-town appraisers, unless the report is co-signed by an appraiser who knows the area. Speak with the bank manager; it is important to know the bank you are dealing with, he stressed.
There’s more optimism in the air, according to Miller. Here are some signs:
*Stocks have improved.
* The unemployment rate has gone down a bit – the unemployment rate in the San Jose-Sunnyvale-Santa Clara MSA was 10.7 percent in December 2010, down from a revised 10.9 percent in November 2010, and below the year-ago estimate of 11.5 percent, according to the Employment Development Department.
* Google is hiring 6,000 new employees nationwide and 2,000 locally.
* Heavier traffic these days points to more activity and more people being employed.
“Everything is starting to turn,” Miller repeated.
Miller, who is well-known for his expertise in the business, said he is very confident that the housing market in the region will do well this spring. But time is of essence. He told REALTORS® if they have sellers who are sitting on the fence, “tell them to get their house on the market now, within the next two weeks.”
California Association of REALTORS® Vice President and Chief Economist Leslie Appleton-Young agrees with National Association of REALTORS® Chief Economist and Senior Vice President of Research Dr. Lawrence Yun.
“Absolutely the worst is over, but we will have a slow recovery,” Appleton-Young told SILVAR members at this morning’s Los Gatos/Saratoga District tour meeting.
Here are some positive signs:
- GDP (Gross Domestic Product), which showed a drop of 2.6 percent in 2009 – the largest drop since 1938 – is rising slowly. GDP was up 1.7 percent in 2010 Q2, and up 2 percent in 2010 Q3. There has been positive growth in the economy for the last five quarters. It shows the federal government’s economic stimulus has worked, Appleton-Young said.
- The Consumer Confidence Index in October was at 50.2, up from 48.6 in September.
- Consumer spending was at 1.9 percent in 2010 Q2.
Unfortunately, it’s still not enough to convince businesses that they should expand, she said.
Consumers are downsizing and maintaining the attitude that “less is more.” They are shopping at discount stores like Walmart, so luxury goods are struggling.
“We can’t look to consumers to drive this recovery,” Appleton-Young surmised. “There’s nothing positive on the horizon for consumers right now, and there won’t be until we start to see positive job numbers and this whole labor market starts to turn around.”
Appleton-Young said California is seeing more challenges than the rest of the nation because Sacramento and regional and local governments “are working to make things worse” with their cutbacks and layoffs. Big losers in California are construction, manufacturing, trade and transportation and financial activities. The winners continue to be education, health services, leisure and hospitality.
Appleton-Young said inflation is 18 months to two years away, but she believes a dose of inflation and increase in interest rates would actually be a positive sign that the economy is moving forward.
2011 will be “a lackluster year,” with no significant job growth till late in the year, said Appleton-Young. She doesn’t anticipate that there will be any meaningful reforms next year, as “the government has done all it can to make funds available.”
“As John Maynard Keynes put it, ‘You can’t push on a string,’ you make money available, but if the banks don’t want to spend …,” she commented.
For 2011, the C.A.R. chief economist anticipates a GDP growth of 2.4 percent. For California, a job growth of 1.6 percent; unemployment at 11.4 percent, home sales up by about 2 percent and a slight rise in the median price by about 2 percent.
“We’re still seeing limited inventory of good distressed properties and still very nostalgic upper-end sellers who are not appreciating the market we have today. They are going through a very painful situation,” she said.
According to Appleton-Young, the wild cards for 2011 are:
- Another recession? Some people think there could be a double dip.
- Federal economic policies – there is much uncertainty regarding future tax rates
- Negative equity home owners – there are still many home owners who borrowed excessively against their home equity
- Shadow inventory – distressed sales will continue to factor in the marketplace for four to five more years because there is still a large pool of home owners underwater.
Pictured left to right: SILVAR Executive Officer Paul Cardus, Board Director John Tripp, 2010 President-elect Gene Lentz, C.A.R. Vice President and Chief Economist Leslie Appleton-Young, Los Gatos/Saratoga District Chair Bill Rehbock and 2011 President-elect Suzanne Yost.
Silicon Valley Association of REALTORS® says ... 