[00:00:10] Speaker A: The Michael Hatfield re Max team presents real estate and more.
[00:00:15] Speaker B: Bay Area real estate is different than in all of America. And why? What's up with homebuyers? What's on sellers minds? How is the market and much, much more.
[00:00:27] Speaker A: Now here's your host, Michael Hatfield.
[00:00:29] Speaker C: Well, welcome back, folks, to the real estate and thank you for listening in. Today. We have assembled some listener questions, and Nancy and I are going to do our best to answer those questions. We're going to talk about the importance of title insurance as well as, you know, when you place it on a new home that you're buying, other important items involved in a buy sell transaction. We will talk about our real estate markets as well. And thank you for tuning in. And welcome to the real estate and more show. Hi, Nance.
[00:01:03] Speaker D: Hi, Michael.
[00:01:04] Speaker C: It's great to see you again. It's like we live apart, right? Wrong.
Anyway, you had a question for me? You start out.
[00:01:15] Speaker D: Me start out.
[00:01:17] Speaker C: You start out.
[00:01:17] Speaker D: Okay, so how are most people going about buying a home these days? Do they find buyers are contacting us? Do we find the buyers are contacting us first or after they've been in the process a while?
[00:01:32] Speaker C: Okay, so I'm supposed to answer that.
[00:01:34] Speaker D: Go ahead.
[00:01:35] Speaker C: I find that most buyers, they survey the web because they're people that are of the web generation. Internet is everything. They take a look at what they see on the big sites like z or r or whatever, and then they bring that to the table. And when they meet with their agents, they are the experts and they're telling the agents with boots on the ground and the experience what's really going on. And we find that it's sometimes 180 day direction, 180 degrees out of phase with what is going on. They may come in and say, well, the house is on for a million five. Let's offer them a million four. And we have to be the bearer of bad news and say, you know what, there's probably going to be somewhere between seven and eleven offers on this particular home. It's probably going to be in the range of 1,000,650. And we have to do a market analysis so that we can give you a suggestion on what price to offer. But it's not like you think. And they have a hard time swallowing that at first. But after a while they say, okay, after they've missed out on one or two because we've done it their way, then they say, okay, you know, now we see. So let's go get it. Let's win this race.
[00:02:50] Speaker D: I think you're right. I've seen it. We've experienced it.
[00:02:54] Speaker C: Let's talk a little bit about the big segment of buyers. Our buyers are, as mentioned a little bit earlier, the Internet generation, the people of the millennial vintage, how do they typically start and go about the beginning of their bypress process before they call us?
[00:03:13] Speaker D: Well, funny that you asked that question. I see the approach of this group as kind of using a playbook, as we would call it. And they go to their source, that is, some larger Internet site like z or r or something. They find articles, they read the articles. However often those articles are, quote unquote, late to the party, meaning they're outdated opinions and so to say, they often, then they often discuss with all their friends. And who knows, maybe they're a local mechanic and this and that, you know, sources. And finally, then they decide, hmm, maybe they need to come to us and to use an expert. So anyways, they discovered that the housing, you know, housing market is much more complex than they initially thought or believed. And, you know, that's important because then that's where we can come in and really help them, prop them up and get them to meeting their goals and objectives, to buying a home. And it's definitely prudent to hire an experienced realtor to guide you. Just like if you hop on a plane, you have that faith in that airline crew to get you from point a to point b.
[00:04:31] Speaker C: Absolutely. You know, it's kind of interesting. It takes a while for anybody to put their confidence in someone else that in some cases, they really don't know that well. And I understand that. I understand that totally. So we let them override us when they make offers a few times until, you know, they failed.
It takes us maybe anywhere from three to 5 hours to really put together a good offer.
And then if you put the price at too low of a number in a seller's market, it's not going to win the race. And we as a team that works for the public are, our objective is to win the race for our buyers. If we represent sellers, we want to get the biggest proceeds that we can for them. If we represent buyers, we want to get the best house for the best price that we possibly can for them.
[00:05:29] Speaker D: Absolutely. That's, that's our goal, you know, to help them. That's what we're in it for. But anyways, so let's talk about real estate markets right now. I read something about how real estate markets are often described. How are real estate markets categorized? I know you have your own description, Michael, about how real estate markets are categorized well.
[00:05:54] Speaker C: A lot of people categorize it as having a primary market, a secondary market, and a tertiary market. And this is by population of those particular areas. A primary market is usually somewhere around 5 million or more people, and that could be a gateway city like New York or San Francisco or Los Angeles or Chicago.
Secondary markets are one to 5 million people, like you would say in Minneapolis or Denver, of that type of size of population. Tertiary markets are population of 1 million or fewer, usually small towns, conglomeration of rural towns, kind of like Boise or Columbus, Ohio, something of that nature. And, you know, I say that that's all well and good, but for me, I. I would like to describe it a little bit differently. I'd say that in the United States, we have tens of thousands of real estate markets, and each one of them swings with the flow of the overall big market that is controlled by a lot, by how the interest rates are, and, you know, what's going on in the world or what's going on in the nation.
So if you say, well, we have 50,000 real estate markets in the country, then those are boiled down to price ranges within each one of those markets. And each one of those price points makes a difference. It makes a difference because, like, if you had a home that's $10 million, you're going to have one buyer, two buyers. If you have a home that's $1 million, then you're going to have 300 potential buyers. If you have a home that's 800, you might have a larger number. So that's kind of how it works. And when you go to assess the value, value of a home for sale, because you have to come up with a price, you want to be very cognizant of those individual markets in those locations.
[00:08:06] Speaker D: Right. It's like the question that you get asked sometimes around town. How's the market?
[00:08:13] Speaker C: Yeah, it's constant. You know, that's the first question people ask you is, hey, how's the market? What market? What market are we talking about? Which market are you talking about?
[00:08:23] Speaker D: Right, exactly. What market?
[00:08:25] Speaker C: The leasing market, rental market. You're talking about the market in San Francisco, and you're talking about multifamily, you're talking about detached. And what price point are you talking? You're talking about Tiburon above 4 million, or where are you talking? And once you've narrowed that down, then you can give an answer that makes sense to what we're seeing here today in the Bay area.
[00:08:52] Speaker D: The variables. Yes.
[00:08:54] Speaker C: Yeah. Well, someone in the audience has asked the question, when I buy or sell, why is the name of the escrow company often the same as the name of the title company?
[00:09:06] Speaker D: Right. That's a really good question. Most transactions have the escrow and the title insurance aspects handled by the same title insurance company. Escrow provides the third party who ensures the transactions done fairly for both the buyer and the seller per the specific escrow instructions. So during the escrow process, the back end research of the title occurs, and when the escrow is about to close, the title insurance is ready to be issued. The escrow process can be split from the title insurance provider, but it makes the overall transaction just, you know, a whole lot more cumbersome. Try to avoid that if you can. And it's typical that it is avoided, at least it has been, by having.
[00:09:52] Speaker C: The same company do the escrow as well as the issue, the title insurance.
[00:09:57] Speaker D: Right, right in the title. But anyways, by the way, in some states, not California, escrow is provided by attorneys. And what's your opinion? Do you prefer an escrow done by an escrow company or by an attorney?
[00:10:12] Speaker C: Michael, we're going to take a short break. We'll be right back.
[00:10:19] Speaker E: Welcome to the real estate minute with Re Max expert Michael Hatfield. Michael, what traits should we look for in selecting an agent?
[00:10:26] Speaker A: Look for a deal maker with a positive attitude who will work tirelessly for you. An agent who is adept in multiple offer situations, drafting contracts, marketing and advertising. A client's home is familiar with multiple cultures, experienced in mortgage financing, inspections, and escrow is a huge asset to his client.
[00:10:47] Speaker E: What can you do as a plus for clients?
[00:10:49] Speaker A: Your agent is your eyes and your ears, one who works behind the scenes on your behalf. A great attitude, working well with others and keeping clients priorities. Number one is a given for us.
[00:11:00] Speaker E: Call 925-32-2775 now to schedule an appointment or complimentary home analysis for excellence in real estate. Call the Michael Hatfield re maximum team at 925-32-2775 or go to michaelhatfieldhomes.com dot.
[00:11:17] Speaker A: Now let's get back to real estate and more with your host, Michael Hatfield.
[00:11:29] Speaker D: Do you prefer an escrow done by an escrow company or by an attorney?
[00:11:34] Speaker C: Well, that's probably one of the best questions ever. For the last 2025 years, we've used a select number of escrow officers, and the reason that we've done that is we know them to be professional, be attentive and be efficient in what they do. If they do not handle certain little things that come up in an escrow properly, then it could jeopardize the actual transaction. And we don't want that using attorneys for real estate in California.
I've only done it a few times, and it has created a little bit of an issue because things are handled differently than they would be if you going by standard operating policy, which is using an escrow company and an efficient escrow officer. So my personal opinion is that I would prefer using escrow officers that do it day in and day out.
[00:12:35] Speaker D: Right. They have the expertise and can make it run smoothly. Smoothly, yeah.
[00:12:40] Speaker C: Just one man's opinion, though. And, you know, we've had an escrow officer on the program, and she's highly efficient. She's very professional. And, I mean, I've never had an issue with actually taking the transaction from point a to z with using her and her services. And also she's.
She coordinates with the title company so that the title policies are ready to be issued at the time when there needed to be.
[00:13:13] Speaker D: It's worked very well. Yep.
[00:13:15] Speaker C: Yes. Well, it seems many people are interested in closing costs and other significant components of the transaction. Basically, what is title insurance, Nance?
[00:13:28] Speaker D: So title insurance is a way to protect yourself from financial loss and. And related legal expenses in the event that there is a deficit or a defect. Sorry. In title to your property that's covered by the title policy, right.
[00:13:45] Speaker C: It's a one time purchase, right? Yeah. But now there's actually two policies that are bought. One is for the lender, if there's a lender involved, to ensure them against any, you know, malfunctions with the title, and also a policy, which is an owner's policy, that ensures the new owner against some of the issues that can happen with. With title. Title means that somebody is on the public record as the owner of a property, right?
[00:14:20] Speaker D: Yep, that's right.
[00:14:21] Speaker C: So who.
What are the different types of title insurance and who pays for it?
[00:14:30] Speaker D: Right. So there's two types of title insurance. So there's, in California, there's the CLTA that insures the property owner and the alta, or alta that insures the lender.
[00:14:44] Speaker C: Ah. So who pays for it? Normally, who pays for these two policies?
[00:14:50] Speaker D: The buyer.
[00:14:51] Speaker C: Yeah, normally it's the buyer. I have seen a situation where the lender's insurance was paid by a seller in one specific locale. That was the norm within that locale. But generally speaking, the buyer, it's his loan, her loan. So they end up having to pay with a one time cost of that title insurance. So title fees on like a $1 million purchase with an $800,000 loan. The owner's title insurance is about $2,900. And the lender title insurance is about $1,251. These are, again, our one time fees.
[00:15:34] Speaker D: Which is nice, one time fee, and then you're done with that. But anyways, as a brief aside, what would the approximate escrow fee be for, like, a million $200,000 purchase with a loan of 800,000?
[00:15:50] Speaker C: With those numbers, the escrow fee would be about $2,500.
That's one of the posted companies. They post these fees, and it's usually a percentage times the $1,000 that composes each thousand dollars that compose the transaction price, and then there's a fee on top of that. But about $2,500 on a $1,200,000 purchase is about right.
[00:16:19] Speaker D: Got it.
[00:16:25] Speaker C: Oh, back to title insurance. What does title insurance actually cover? Why pay for this insurance?
[00:16:33] Speaker D: Okay, so any number of title issues may arise even after the most meticulous search of public records. These hidden defects are dangerous, and because you might not learn about them for months or even years later. And they could be hidden, and this would be after your home's purchase. But some common examples of risks covered by your owner's policy include defects in title caused by.
Like, one of them would be improper execution of documents, right?
[00:17:06] Speaker C: Right. Sometimes someone could prepare the documents of the grant deed improperly. Then it be recorded at the county, and it was improperly done. Therefore, the new owner may be questionably on record and not certain on record. It could cause an issue where the title insurance would come in to help cover the new buyer. What's another one?
[00:17:31] Speaker D: Mistakes in recording or indexing legal documents. I mean, you've got humans doing this work, right?
[00:17:37] Speaker C: Right.
[00:17:38] Speaker D: There's any possibility there.
[00:17:40] Speaker C: So at the county recorder's office, when a document comes in, somebody stamps the legal time, the date, the time on it, and then it is indexed amongst other documents that are coming in, and then it becomes part of public record. So when you buy a home, you get a grant deed, and that grant deed is, your name is on it, and it actually is exchanged in escrow for the money that has been paid for the property to the seller. So, in essence, when it is recorded in the county records, it is part of public records. Is that grant deed still good?
Yep, it's still good. But there could be a lot of problems because it's not on the public record. It's important that it is. What's another one?
[00:18:33] Speaker D: Forgeries and fraud.
[00:18:37] Speaker C: Yeah, somebody forges a document and fraud and then it's discovered later on and you're the one on the record, and it's not a good solid on the record. Then your title insurance would become.
Become involved in it to resolve it. So it protects you. What about undisclosed or missing errors?
[00:18:58] Speaker D: Errors?
[00:18:59] Speaker C: How does that work? Do you know?
[00:19:01] Speaker D: Not exactly.
[00:19:04] Speaker C: So in essence, let's just say that there was someone passed away and that it was believed that another beneficiary that would have been on title was deceased, so to speak. And yet this person then pops up later on after the property went into some other beneficiary and says, hey, this is my property. You know, why has it been sold and why is this other person? It was one of those kind of things to where it belongs to the new owner. And the policy actually covers the new owner to make sure that he's protected in a clear title, which is great.
[00:19:43] Speaker D: Another good reason to have it. Obviously, unpaid taxes and assessments could be another area. Right.
[00:19:50] Speaker C: Unpaid judgments and liens, mental incompetence of guarantors on the deed.
[00:19:56] Speaker D: Of what?
[00:19:57] Speaker C: Mental incompetence of grantors on the deed. If someone is mentally incompetent and yet they're signing a deed, then it's got a question of its validity.
Impersonation of true owners of the land, obviously by fraudulent persons. That could cause a problem with the ownership of the title, could it not?
[00:20:17] Speaker D: Yes, indeed.
[00:20:19] Speaker C: Refusal of a potential purchaser to accept the title based on the condition of the title. Now what does that mean? That's kind of a tricky one right there.
The new buyer can look at the title and say, you know, I don't like the way that this looks. It looks too questionable. It looks like it's a problem. It's not clear that the seller that I'm buying it from actually owned it. So the title company can come in, especially if it's closed escrow, and say, well, we'll guarantee the title on this. In fact, that's similar to what they do when they close escrow and issue that title insurance. So it's kind of interesting.
[00:20:58] Speaker D: Dollars well spent. Well spent, yeah.
[00:21:01] Speaker C: So why does a buyer have to pay for title insurance for his mortgage lender?
Why?
[00:21:08] Speaker D: Well, lenders funds require a title policy to protect their funds that they've loaned to you to buy the particular home. It is a one time fee, which is good.
[00:21:20] Speaker C: And so the owner's title insurance then comes in as a second one, and that protects the actual new owner. The lender's title insurance only protects the lender, but the owner's title insurance protects.
[00:21:34] Speaker D: The owner, even though it's said to be optional. I don't, you know, I don't think that's a good idea.
[00:21:41] Speaker C: Yeah.
[00:21:42] Speaker D: And 99% of buyers do opt to buy owner's title insurance, which is great.
[00:21:49] Speaker C: There you go. Hey, let's switch gears a little bit and start talking about the markets again.
For example, we talked in a recent show that back 40 years ago, the nation's population would move about 11% or more of the population each year. Now, that's kind of came down to 8.5% of the population is moving this year. Well, there's been a lot of movement as of recent in moving out of certain cities into other ones and so forth. And it was just reported for March of 2024 that the inbound net inflow, the highest city, Phoenix. Phoenix 6300 people have moved into Phoenix in March. The number two, the top ten areas where people are moving to Las Vegas 5603rd one is Sacramento 5500 and so forth. It goes all over the nation. And then let's talk about where people are moving out of. The first one where people are moving out of is.
Tell me Los Angeles. You can't see. Come on.
Los Angeles. 32,100 people in January through March moved out of Los Angeles. New York is the next highest. 29,900 people moved out of New York.
And our San Francisco, 28,000 people moved out of San Francisco to another place in the United States. Kind of interesting.
Don't know why, but there's several different reasons.
But that's the way it is. So one other thing to think about is in the month of March, home prices were up 10.3% in the month of March over the March of 2023. Yep. What about medium?
[00:24:02] Speaker D: Home price in California was up to 818,600.
[00:24:08] Speaker C: Oh, wow. A lot of price upward that we've seen in March. How many homes were sold, do you know?
[00:24:18] Speaker D: Approximately 22,000.
[00:24:20] Speaker C: Yeah, 22,301 homes were sold in the month of March. That was actually down 7%. It's kind of crazy to think about it. Medium days on the market.
[00:24:34] Speaker D: Median days. Approximately a month.
[00:24:37] Speaker C: Yeah, 29 days. 29 days. So, Nancy, in summary, do you have some words of wisdom that you would like to say to our listeners?
[00:24:47] Speaker D: So my advice would be, do your web study, but take all of this web advice with a grain of salt, then connect with a trusted, experienced professional who has boots on the ground. Remember, you do not know what you do not know. And if your friends are not real estate professionals, they will not know much more. Honestly, they won't. So I believe that in buying or selling a home, one does not want to be cut short in the knowledge department for sure.
[00:25:19] Speaker C: That's all good to know. Real estate is not simple like flying a Boeing 8 miles high at 8 miles/minute it takes years of training to provide a safe flight for a safe journey in real estate. And whether you wish to hire our team or someone else, select an experienced pro you can communicate with and someone you trust, someone that works hard. Also, your experience will likely be much better in the home buying process. Thank you for being on the show with me Nance.
[00:25:50] Speaker D: Thanks Michael.
[00:25:51] Speaker C: You've been listening to the real estate and more show. I am your host, Michael Hatfield. Important topics like Bay Area real estate and interesting people listen to archived real estate and more
[email protected]. Right Slash Radio that's Michael hatfieldhomes.com radio. The real estate and more show is available on demand on Spotify, Amazon, Apple, iHeart, Pandora and most major podcast platforms as well. I hope you will tune in next week and in the meantime, have a blessed week. Have a blessed week.
[00:26:35] Speaker B: The views and opinions expressed are based on current economic and market conditions and are subject to change. Information on the show provided for illustrator purposes only and does not constitute professional or legal advice. Information from sources deemed reliable but accuracy and completeness not guaranteed. Michael Hatfield and the Michael Hatfield re Max team have no liability for information discussed on the show. Consult with qualified professionals prior to taking action.
