Lenders are looking at communities and geographic areas to determine "depreciating markets." If you are buing in a depreciating market, the lender may be extremely cautious or refuse to loan on the property based on the loan-to-value ratio. Here's the catch-22: If it takes 30 to 45 days to get approval for a loan, your escrow period will be approx. 15 to 30 days more. Over a 60-day period it is possible your purchase in a depreciating market may depreciate below the contract sales price. Your lender may want to renegotiate the terms–the loan amount or sales price–before funding.

Having flexibility in your cash down is wise…and one way to offset this type of situation. More cash down drops the loan-to-value ratio. Alternately, proceed as far toward the approval process and get a fixed figure not to exceed in mind. If you can get approved for a $600K purchase, find a home under $600K to allow some wiggle-room.

It is customary that items permanently attached to the structure stay with the structure. Built-in appliances, wall-to-wall carpeting, blinds and attached lighting fixtures are usually considered “real property” and are sold with the house. “Personal property” applies to items that are not integral to the home, are not attached to the structure itself, and can be removed without significant alteration.

However, “attached” objects like storage sheds, garden ornaments, and even prized rose bushes outside the house are more likely to be thought of as personal property than real property. Freestanding items are very likely to be kept and removed by the sellers. If you are buying the home because of the beautiful the back yard water sculpture or garage storage cabinetry, make sure it's staying!

Some sellers will omit such items from the listing they plan to remove, and/or place a note on the items when the house is on the market indicating what will be removed. Decorative items in the garden, unsecured spa or shed, and custom drapes that match furniture could be “personal property” of the seller. If you have any doubt….include in the purchase contract the specific items that may fall into these “gray” areas.

Have you been on the receiving end of an unpleasant new-home surprise? Buy a home under the assumption that the back yard bird bath, 20×25' dining room "throw rug" or the custom drapes will be there when you move in…..and they're NOT!?!

Buyers, don't assume. The items are listed on the MLS are to be included with the sale. The safest way to avoid unwelcome surprises is to be specific in writing.

We’ve seen anything from antique glass door knobs, pool table lights, hoses & caddies, car tents, tool sheds, workbenches, dog runs, over-the-toilet cabinets, portable closet systems, and wall mirrors removed from sold homes by the sellers. Most of these items are not ever specifically mentioned in an MLS listing, flyer, or purchase contract. The seller may consider them “personal property” which can be removed.

I have a new listing at 575 Bell Street in East Palo Alto. The house is boarded up. The value is in the land, listed at $329K. No photos on this one, but if you're an investor or builder, take a drive by and let me know if you'd like more info.

What's the average cost of Section 1 repairs?

It's hard to determine an average cost as the size of home and type of amenities may be a significant factor. Most chemical treatment services for drywood or subterranean termites make up the bulk of the Section 1 expenses (usually each is between $1500 to $2000, or more if the house is multi-story or very large). However, if there is an unchecked plumbing leak and significant dryrot damage, that could be a greater expense. The cost of pulling and replacing a leaking shower stall may exceed the fumigation cost. If a roof is older, dryrot to the eaves and underlayment can also be a significant Section 1 item.

It's not uncommon to see $4000 to $7000 in Section 1 repairs to a Bay Area home that is 20+ years old. Usually properties that have been long-term rentals will have a higher Section 1 cost than owner-occupied homes. It's also quite common for drywood or subterranean termites to be found, or both. Usually the only time we see a perfectly "clear" pest report is in newer construction (0 to 3 years old) or townhome/condos where only an interior inspection is performed.