Fantastic real estate investment opportunities are available in the San Francisco Bay Area.

The declining U.S. housing market with the resulting foreclosures have resulted in a large inventory of bank owned properties in the greater San Francisco Bay Area. These properties represent the type of investment properties that foreign investors have been hoping for.

The U.S. real estate market is one of the most sought after investment opportunities for international buyers. Today’s bargain prices in the San Francisco Bay Area is resulting in more and more foreign investment activity in the Bay Area housing market.

One Realtor in the East Bay community of San Ramon recently announced she had a Chinese investor arriving in a couple of weeks that was interested in buying up to 100 homes in Antioch and Brentwood, CA.

It seems every street in Antioch and Brentwood has at least one home for sale on it. In some of the neighborhoods we have been through, you find 4 or five homes for sale on some streets. Many of these properties are vacant and bank owned.

The situation is far from over. You can find continuing signs of more homes going into the foreclosure process. Lawns are dying and home maintenance is suffering.

Homes that sold for $800K+ a few years ago are now being priced in the $300K range. Rents are rising and this is increasing the potential for positive cash flow investment properties in the East Bay Area – something very hard to accomplish with the high property values in California.

Some golf course homes in Brentwood, Ca. are listed at prices that reflect almost no appreciation for the past several years. These are great buys for waiting for golf enthusiasts. Our recent tour through Antioch and Brentwood, confirmed our belief that these communities offer great retirement opportunities for baby boomers in San Ramon, Danville and other I-680 corridor communities.

We wrote about: Now is the Time to Buy that Retirement Home

Antioch and Brentwood represent a perfect buying opportunity for young couples looking for their first home. Housing this affordable is hard to come by in the Bay Area. The housing market will recover and when it does, the same affordable housing dynamics will push property values in Antioch and Brentwood back up.

When BART extends into Antioch, this will bring more upward pressure to home prices in the area. Population increase in the area is expected to be in excess of 40,000 in the next 20 years.

When the bottle-neck on Highway 4 in Antioch is removed, another positive factor for home value increase will be in place.

All-in-all Antioch and Brentwood currently offer some of the best real estate values for buyers and investors in the Greater San Francisco Bay Area.

The neighbors in San Ramon CA are dancing in the streets. At least the ones near the corner of Bowlin Ave & Tareyton Ave. I’ve been driving by this boarded up eyesore for the past two years wondering what the story was.

If my facts are right, the previous owner, who was going to remodel it, died. It’s been a withering eye-sore ever since. The good neighbors have mowed the lawn weeds every now and kept an eye on it to prevent vandalism or squatting.

Well – no more!

I stopped in and talked to Brian, the new owner, who is doing a complete remodel on the place – adding over 1000 square feet.

This house is a perfect example of why we think this neighborhood between Montevideo and Pine Valley represents some of the best home appreciation possibilities in San Ramon, CA. We’ve written about it before:

• San Ramon CA - Move Up Buyers Dream
• South San Ramon - Perfect Storm of Opportunity

Brian tells me this is not going to be the same house when he is through with it – only two interior walls will remain as they are now. A whole new floor plan is going to emerge.

I think this house will be a good story to follow to help illustrate why we think this area of San Ramon is so full of possibilities for above average home appreciation in the next few years.

Craig & Tracey are experts in this neighborhood as are Kris & Dennis Viers, two of our strategic partners who do loans. Contact Craig if you want more details on this neighborhood - (925) 984-4910 

Recently, I’ve written a couple of posts about the dilemma of pricing a home right to get it sold.

• How to Sell a Home in Tough Market
• The House Price Challenge

How do you price a home right according to existing market conditions? In the “good old days” of 2002 – 2004, it seemed you could price a California home for whatever price you wanted and somebody would show up to buy it or at least bid on it. The market was experiencing phenomenal appreciation as bidding wars pushed prices higher and higher while sellers danced in the streets and buyers walked around either punch drunk or frothed into a frenzy of desperation to lock in a purchase.

In an appreciating market, getting top dollar for your home can be as easy as simply pricing it above market value and letting the market catch up to the price. This can take some patience or no patience depending on how rapid the rate of market appreciation.

But when the market turns, holding onto the “fantasy profits” (appreciation in the mind, not in the bank) can set us on the road to sorrow and frustration, if not ruin. It is the “holding on” to unrealistic hopes, expectations, or fantasy profits that can lead to the slippery slope of chasing the market down.

A good agent who knows the market can help to position price to attract the most attention and set up the dynamics for a quick sell or maximum net depending on the client’s motivation. Sometimes it is not possible to have both. Sometimes a quick sell puts some limitation on net/net. Sometimes lowering the asking price sets the stage for multiple offers that result in bidding the price up.

Whatever the market conditions or circumstances – homes continue to sell. Engaging the services of an experienced Realtor that is neither in la-la-land or trapped in their own narcissitic needs remains a good investment for home sellers wanting to maximize the potential of a real estate transaction.

The following is from Tim Soldati, one of our strategic partners.

Being a mortgage broker, I get the luxury of working with real estate agents of all calibers. I’ve seen the great ones and I’ve seen the not-so-great ones. On a more recent transaction, I am reminded of the importance of working with an experienced agent.

A client of mine decided to by-pass his agent and work directly with the agent of the seller in hopes of saving money. That was problem number one, which I will save for another article.

The property in mind was a foreclosure. That fact alone warrants working with an agent that has experience working with foreclosures and short sales. This particular agent (who shall remain nameless) had no clue what he was doing (ok, it was a guy). When questions arose about time tables to contingency removals, it was clear that this may have been the agent’s first transaction. It was evident that just about every question my client had for the agent had a delayed response as the agent had to go ask his broker for the answer. It became more evident when my client would come to me for answers about the transaction as the agent could not respond in a timely manner, let alone know the answer.

Not once did the agent ever call me during the transaction to see how I was progressing along with the loan side of the transaction (a vital part of the ability to close the transaction). I made a point of contacting him regularly just to keep him in the loop. If it weren’t for that fact, I don’t think I would have ever talked to the agent. A good agent will be the point of contact for the entire transaction.

Then when problems started to arise, the agent made no effort to advise our mutual client. There were issues with asbestos, issues with the quality of the home, and even issues with foundation slippage. But as the agent was originally representing the seller, I think he was more interested in the deal closing rather than fulfilling his fiduciary responsibility to his client. Even the contract itself wasn’t written well that would protect my client’s interest and deposit.

In the end, the deal did close (mainly thanks to me). My client did get proper advice to each issue that arose. The agent was oblivious to most of the issues of the transaction and got to walk away with a commission unearned for the most part. My client was lucky. It could have been a lot worse.

So as you are considering hiring a real estate agent, be sure to ask him/her about their experiences and qualifications. Ask for references. Ask about the number of transactions they assisted on. In tough real estate conditions, it is even more important to be represented by those with experience. While many agents in this market went back to work or secured a day job, be sure you are working with a full time agent that is IN the business. Do not hire an agent that is working part time or on the side. Do not pay full price for part time service. Working with an experienced agent will protect your interest and save you money in the long run!

The client was lucky to have a wortgage broker like Tim, who was willing to take on the burden of assisting in areas where the real estate agent in quesiton should have been serving the client’s needs.

Buying real estate in the San Francisco Bay Area is always a local experience. The San Francisco Bay area is rife with real estate micro-markets. In our region of the East Bay, we have local real estate markets where the drop in home values can vary by 30% or more – and these communities are only 30 miles apart. This is one reason why international buyers need local professional real estate agents to assist them with their purchase of U.S. eal estate.

Even when the buyer is from out of the area or out of the country, real estate is always a local affair. Many buyers and investors from China, Korea, The Netherlands, Germany, Russia, Ukraine, Canada and many other countries are in the process of buying or investing in U.S. real estate.

The National Association of Realtors reports that in the Spring of 2007 7.3% of homes sold in Florida were to foreign nationals. 65% of Florida real estate agents reported at least one transaction with a foreign buyer.

Nationally, almost one third of Realtors are reporting sales to international clients. 25% of responding Realtors report that their international business is increasing.

A rough profile of the typical international home buyer:

• the typical international buyer purchased a single-family home or townhouse
• the buyer’s primary purpose in purchasing the home was as a vacation venue for family and friends
• the median sales price paid by the typical foreign buyer was $299,500 and was financed through a mortgage loan
• the typical foreign buyer in the U.S. spends 4.2 months in their U.S. property

Sixty-nine percent of international home buyers used mortgage financing, while 28 percent purchased their home with cash. One positive consequence for U.S. housing markets – especially those that boast a significant share of foreign home buyers – is that such purchases lower the risk of mortgage defaults. As a result, cash purchases lessen the foreclosure risk against this group of buyers. Lower foreclosure risk, in turns, lessens the possibility of a price decline in a market. In the wake of the subprime mortgage fallout in the spring of 2007 and the subsequent increase in mortgage delinquencies and foreclosures, the healthy share of cash purchases by foreign buyers is a good sign for the future of those markets.

The reasons international buyers purchase U.S. real estate.

California is the #2 destination for international homebuers with 16% off all foreign real estate purchases. Asian buyers accounted for 44% of all international buyers purchasing California real estate.

The NAR’s conclusion from the survey:

We live in a global economy where there are virtually no trade borders. The Internet is accessible from nearly all countries around the world. Web sites display information about U.S. real estate to any potential home buyers regardless of where they live. And as more and more people in different nations recognize the value of owning property, the opportunities and challenges for real estate professionals to broker U.S. property to foreign home buyers are numerous.

While U.S. housing markets are no longer performing at record-breaking levels, U.S. real estate is still considered a prime investment opportunity for foreign buyers and a “safe haven” in which to put their money. Whether they use their U.S. home as rental/investment property, as a vacation home or both, non-U.S. residents account for a significant share of home buying activity. It is likely they will continue to do so. With the weakened U.S. dollar against foreign currencies, those currencies buy a lot more than in previous years. For example, the British Pound Sterling was worth $1.44 in 2001; by 2004 it was worth $1.83. As of mid-year 2007, the pound was worth nearly $2.00. The euro has also increased in value against the U.S. dollar. More purchasing power for foreign buyers mean they can afford “more house” – particularly in a stabilizing U.S. housing market.

Another factor drives international participation in U.S. residential real estate markets. The U.S. market contains a large supply of real estate. It is also fairly easy to purchase a home in this country; the U.S. does not restrict or scrutinize most property purchases by foreigners, as happens in other countries. There are few barriers to owning a property. Except to the extent necessary to enforce U.S. laws and regulations (including immigration and homeland security), foreign participation in the U.S. housing market is largely free. Foreign investors have the same property rights in the U.S. as Americans do.

Foreign nationals purchasing real estate in the U.S. benefit from engaging the services of professional Realtors with international experience like our own Paul Mees. Paul is a native of The Netherlands. He has an international business background and owns homes in the U.S., Holland and Italy. You can contact Paul at (925) 963–4246

Related Article:

Dollar, real estate slump make American property appealing to foreigners