Deciding what to look for in a Silicon Valley home

Choosing between a smaller house in an affluent neighborhood, an older, bigger house in a working-class community, or a brand-new home is not always easy. If you’re in this situation, start by examining your priorities and making some comparisons. This is the hardest task: setting your priorities and putting them in order when you plan to buy a home in the San Jose or Silicon Valley area.

Here’s an old “rule of thumb” that I think still has much value here in Silicon Valley: Buy the most house in the best neighborhood you can afford.

Location

  • Is the surrounding neighborhood or the home itself your most important consideration?
  • Are the neighborhoods you are considering safe?
  • Is quality of schools an issue? (the school situation will impact resale value, so factor it in even if you do not have kids or intend to use public schools)
  • Do any of the areas seem to attract more families with children, or adult residents? Where do you fit in?

Appreciation
Another consideration is home-price appreciation. Unfortunately, this is not easy to predict. In the late 1980s, the more expensive move-up housing appreciated wildly. But, during the recession that followed, smaller homes tended to hold their value better than more expensive ones. We can discuss the factors effecting the current situation. One fairly consistent element impacting appreciation, though, is the quality of the schools. It seems to be the #1 predictor, overall, of a home’s appreciation in good markets and lack of depreciation in bad ones. The schools matter, then, whether you are intending to send your kids to public schools or not. (Hence the eternal popularity of Saratoga, Los Gatos, Monte Sereno, Almaden Valley, Cupertino, Los Altos, etc.)

Value and Condition
Home inspections, seller disclosure requirements, and my experience and knowledge will help you decide which properties are valued properly, and which are in good condition. Disclosure laws vary by state, but in some states, the law requires the seller to complete a Real Estate transfer disclosure statement.

Here is a summary of items you can expect to see in a disclosure form:

  • Whether or not the home includes a kitchen range, oven, microwave, dishwasher, garbage disposal, trash compactor.
  • Safety features the home contains, such as burglar and fire alarms, smoke detectors, sprinklers, security gate, window screens, or intercom.
  • The presence of a TV antenna or satellite dish, carport or garage, automatic garage door opener, rain gutters, sump pump.
  • Amenities such as a pool or spa, patio or deck, built-in barbeque and fireplaces.
  • Type of heating, condition of electrical wiring, gas supply, and presence of any external power source, such as solar panels.
  • The type of water heater, water supply, sewer system, or septic tank.

Defects
Sellers are also required to indicate any significant defects or malfunctions existing in the home’s major systems. A checklist specifies interior and exterior walls, ceilings, roof, insulation, windows, fences, driveway, sidewalks, floors, doors, and foundation, as well as the electrical and plumbing systems.

Hazards and permit violations
Disclosure forms also require sellers to note the presence of environmental hazards, walls or fences shared with adjoining landowners, any encroachments or easements, room additions or repairs made without the necessary permits or out of compliance with building codes, zoning violations, citations against the property, and lawsuits against the seller effecting the property.

Soil and water
If disclosure forms do not mention these, be sure to ask about settling, sliding or soil problems, flooding or drainage problems, and any major damage resulting from earthquakes, floods or landslides.

Restrictions
Condominium sellers must reveal information about covenants, codes and restrictions, or other deed restrictions.

It’s important to note that the simple idea of disclosing defects has broadened significantly in recent years. Many jurisdictions have their own mandated disclosure forms, as do many brokers and agents. Also, the home inspection and home warranty industries have grown significantly to accommodate increased demand from cautious buyers. Be sure to ask questions about anything that remains unclear, or does not seem to be properly addressed by the forms provided to you.

Adapted from Inman News Features
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