Multiple Offers

Bel Estos Drive near Carlton and Rosswood in San Jose's Cambrian areaMy Cambrian area of San Jose Real Estate Report was recently published with the updated numbers from the closed sales last month for this part of San Jose (95124 and 95118 with a little of 95008 too). Please click on the link above to see much more information there.

You might notice things look a little different. The REReport page has been updated to improve load time and give mobile viewers a better experience. With the update, the Sales At A Glance (the bullet points) section and both Short Sales and Foreclosures have been dropped, but Days of Inventory has been added and if you click the link you will find a new kind of market commentary available. It will take a little while to clean up some quirks in the new system, so each area might have some things missing, but expect them to return soon! Thank you for your patience.

In this district of San Jose, we have been experiencing dreadfully low inventory of homes for sale, and buyers aren’t backing off as much as usual for this time of year – I believe because there is just a whole lot of pent up demand from nearly two years of a deep seller’s market. What does that mean? Sellers, if you have a problem home, or one not updated or well maintained, this is the time to sell it – buyers have little to choose from so are purchasing properties that need more work than they would bother with in a more balanced market.

Want to learn more about Cambrian Park real estate, the Cambrian district, Cambrian neighborhoods, school districts and zip codes? Please also see this article: Cambrian Park: Good Schools, Low Crime, Close to Los Gatos and Campbell

Be sure to read to the end to see the live Altos charts too – they are near the end of the article so please keep reading into the next page!

Generally speaking it is still a hot seller’s market and great time to sell a Cambrian home.

 Please see the whole Cambrian Real Estate Report for charts, stats and more.

The condo and townhouse real estate market for San Jose 95124 & 95118

Appraisal value does not equal market valueAn appraisal is an opinion of real estate value  by a licensed appraiser, employed when a house or condo is under contract or sale pending with a mortgage, so that the lender does not over-invest. In other words, when an appraisal is used in escrow, it is to protect the bank which is lending money on the property. Appraisals may be used at other times, too.

Market value is what home buyers and sellers will agree on as the sale price of a property.  When Realtors work up a comparative market analysis or competitive market analysis, they try to figure out where the home will sell in the future, or what the market value will be.  They will also strive to bring that sale price to the top of the possible range of likely values – or go beyond it.

Put another way, appraisals attempt to determine the most precise value for what a home should be worth. Home buyers may or may not agree with an appraisal’s results, though.  The appraisal value does not equal market value.   The market may find the property to be worth more or less than what an official appraisal states as the worth of the real estate.

With an appraisal, there is a subjective element to the opinion of value.  For instance, if a brand new kitchen sink is tangerine in color but in great condition, will the appraiser ding it for being unpopular, or value it higher for being new?  I can tell you that most Realtors would take off projected value for that poor color choice – but I doubt that an appraiser would.  How about a flag lot? Is that worth more or less than a standard lot on the street? Most buyers would prefer a home on the street, and that may impact the sale price, but will an appraiser devalue a flag lot? Maybe.

Or with a view, how much is it worth?  Recently I sold a Saratoga home with a fantastic, once in a lifetime view.  The appraiser who came out for the bank downplayed the view as not having much value at all.  The home buyers who bid on the property, though, thought it was all about the view.

Fair market value is when there is just one buyer (or couple) and one seller (or couple) and the property is purchased with no undue pressure on either side.  It’s not a fire sale for the seller.  The buyer isn’t competing in a crazy multiple offer situation.  The appraisal will have the best odds of matching market value in this circumstance, but even then, it’s no guarantee. In the San Jose area, if there’s only one buyer for the residence and it’s a moderately priced piece of real estate, there may be something wrong that makes buyers somewhat devalue the home. (This is because we have perpetually low inventory – at least as of this writing in 2017.)

In a rapidly appreciating market, appraisal values often lag the probable buyer’s value (or market value). This is because appraisals are always backwards looking in time.  They consider the closed sales.  If a property closed escrow 3 months ago, that purchase price was probably agreed upon 4 months ago, since most escrows run about 30 days.  With multiple offer situations, we may get 6 offers on a Silicon Valley home and four of them can be at a certain number – but the appraisal comes in lower.

Home buyers decide on their pricing based on sold homes which are similar as well as the current competition and the trajectory of the market.  In spots, they say “run to where the ball is going“. If you run to where the ball is now, you will miss it.  So too with an actively changing market.

Sometimes the market gets soft, either generally or in certain pockets or pricing tiers.  When that happens, home sellers can find themselves frustrated if there was a recent appraisal but home buyers don’t agree with the stated value.  “But the appraisal said it’s worth MORE!”  Buyers don’t care about the appraisal. If the buyers who step up to the plate with an offer are the only ones bidding, there’s a good chance that the ultimate sale price negotiated will be the true market value.  That does not make the appraisal wrong, it only means that either prices have gone down a bit since the appraisal or that market conditions have created a lower sale price.

 

 

 

Related reading:

All comps are not equal

Home inspection vs. appraisal

Valuation: price per square foot is only part of the answer

Double app your loanIn this highly competitive seller’s market, some home buyers are choosing to purchase their house, condo or townhouse non-contingent, meaning with no contingencies for inspection, loan, appraisal etc. .  The “non-contingent offer” has been present in the Silicon Valley real estate scene for a few years (since 2012 or so), to the horror of those of us working in the field in 2000 and the years immediately after (it’s a very bad deja vu, given the onslaught of lawsuits that came in its wake last time).  My clients sometimes make this choice, too, explaining to me that they feel it’s the only way to get the property.

With no loan contingency to protect the buyers should the loan not come through (or fail to do so in time), some consumers are electing to “double app” the loan.  Translation: they pursue financing with two or more lenders simultaneously (fill out two loan applications, pay for two appraisals etc.).  Lenders, naturally, don’t like this because only one of them has the possibility of closing the sale or the loan, and only the one who closes the loan will get paid.   In a normal market, with normal contingencies in place, I would not recommend this approach.  But if there are no contingencies to protect the buyer, a second loan may provide a safety net as it increases the odds that a loan will be funded so that the home can close escrow. Continue reading

Multiple counter offer Word CloudMany Silicon Valley home sellers receive multiple offers on a set day, often 7 to 9 days after the house or condo is first on the market.  What happens if they like a few offers and want to counter them?  One option is to issue a Multiple Counter Offer.  How does that work?

With the multiple counter offer process, the seller decides after one or more of the buyers accepts (or if they counter back and forth, or if one buyer improves his or her offer).  No matter the exact path, the seller ultimately must pick one offer and sign off on it to ratify the sale.   In other words, when a buyer agrees to the multiple counter offer terms, it’s not a done deal.  The owner must sign again to accept and select that buyer. Only then is the contract ratified.

CAR and PRDS multiple counter offer paperwork

We have two sets of contarcts, addsenda, etc. in use in Silicon Valley – the PRDS and the CAR.  The California Association of Realtors (CAR) set is used throughout the state.  The PRDS is employed from about Los Gatos to somewhere south of San Francisco on the Peninsula.  Many areas such as Almaden or Campbell may work with either.

The CAR forms library has a separate document for multiple counter offers. Near the bottom of the page, there’s a place for the seller to sign when selecting a buyer for the sale.  Unless this is signed, the buyer doesn’t have the deal.

CAR Multiple Counter Offer

The Peninsula Regional Data Service (PRDS) form is not separate – it’s the same document used for just a single, binding counter offer.  However, at the bottom, there’s a place to indicate if it is a multiple counter offer.  Here’s how it looks:

PRDS Counter offer and multiple counter offer form

Obviously, it is extremely important to notice whether you’re receiving a regular counter offer or a multiple counter offer.  But either way, it’s clear that the seller must agree to choose one of the willing buyers.  Just pay attention to the details!

Are the price and terms of multiple counter offers all the same?

When a seller responds with a multiple counter offer, the price and terms could be the same for all of the bidders.  Most of the time, though, that’s not the case – the price and terms are not identical between one bidder and the next.  There are many possible reasons for this.

  1. There may be an offer with great terms (
  2. all cash , no contingencies, or?) but a price that’s not quite right.  That buyer may only get a counter based on price.
  3. Another potential buyer may have a strong price but not so hot terms (long contingencies, too many contingencies, less than ideal downpayment or financing).  A good example might be a sky high price with 5% down and FHA backed financing and an appraisal contingency (but money available that the buyer just doesn’t want to put in the down payment).  The seller may only counter out the appraisal contingency.   Other times the offer may be great but the contingencies are just too long, so the seller asks for them to be shortened.
  4. Sometimes all the issues are relatively small, such as whether or not the washer, dryer and fridge stay, or how much to pay for a rent back.
  5. Some sellers approach multiple counter offers the way some high school seniors approach college applications and target a “safety” price, a probably attainable price, and a “reach” price – and put three different numbers out there.
  6. I have seen sellers who were annoyed by rude buyers (or their agents) give the unpleasant people a sky high counter.  (The period before the offer deadline is the courtship, and buyers really need to be on their best behavior with both the seller and the listing agent.)

Anything else to know about multiple counter offers?

Two more things to know:  first, some buyers, when given a multiple counter offer, won’t just say yes or no.  Truly motivated and capable buyers sometimes instead just submit a better offer (redoing page 1 with a larger offer price, for instance).   Don’t assume that you won’t get uprooted, even if the listing agent tells you something leading like “it’s looking good for you” (which shouldn’t happen but sometimes may).  As long as the counter is in play, someone else can come in and get it.

And lastly, a good attitude and looking “rock solid” and sure can sometimes win the bid.  Not every seller does this, but it’s not uncommon for a home owner to take the first multiple counter offer returned with an acceptance.  The reason is that they want to sell to someone who is so sure that there’s no hesitation.

Multiple Offers

You may have heard that the Silicon Valley real estate market is softer now than it was a year ago.  That’s true – at least for most of Santa Clara and San Mateo Counties and nearby. In many cases there are now half as many offers as there were then. But it’s still a hot seller’s market, and that means that often there are multiple offers, overbids, and sales with no contingencies.

For my last few listings – which have been in Saratoga, Los Gatos, the Cambrian area of San Jose and the Campbell area of San Jose – there’s been a consistent “spread” of offers.   If there were 6 offers, it might look like this:

  1. Best offer is 5-15% over list price, 25-30% down at least, and has no contingencies for inspection, loan, and most of all, appraisal (the percentage over has to do with whether the home was priced spot on the value or strategically under).  These offers come with all disclosures signed, and the buyer’s agent has even done her or his Agent Visual Inspection Disclosure.  They include the proof of funds and usually also write a nice letter to the sellers about why they want to purchase that home.
  2. Next runner up is usually strong on terms (at least 25% down, no contingencies) but perhaps made an offer price a little under the top value.  Sometimes the next runner up has a good price and mostly good terms, but seems “shaky”.  Maybe they would not include their proof of funds.  Perhaps they would not sign the disclosures yet or otherwise submit an incomplete package.  They don’t come across as certain about buying this property.
  3. Middle of the pack is usually a combination of a price where the home should appraise, at least 20% down, and few or no contingencies.
  4. Bottom offers are barely over list price, have exactly 20% down, and include an appraisal contingency as well as others (one for loan or one for property condition).

If you’ve been writing offers and not succeeding, try to see your own pattern in this spread.  Is there one thing, or perhaps are there two or more things, you’re just not ready to do?

Why it is so hard

Home sellers want to know when they agree to your purchase contract that you won’t back out and that you won’t renegotiate the terms later.  If they have paid for all the presale inspections, they aren’t going to want you to have 7+ days to decide if the condition is to your liking.  They want to know you have read everything and are cool with it.  Likewise with the appraisal. In overheated markets like this one, many times there’s an appraisal shortfall.  Sellers want to sell to buyers who can absorb any deficit, so you need more than 20% down to do that.

We Realtors generally don’t like the kind of market in which buyers get stuck writing offers with no contingencies in order to win the house, but the truth is, that someone in every pack will do it.  And you need to know that if you’re trying to buy a home.   (In my recent Belwood of Los Gatos sale I had 11 offers and 7 had no contingencies, as an example.)

A few years ago, I did a series of articles on multiple offers – everything from financing tips to the value of presenting an offer in person, and much more.  If you’ve been unsuccessful in buying a home and bid more than 2-3 times, please have a read. It may help you a lot:

A summary of tips for multiple-offer situations in Silicon Valley real estate contracts

By the way, in even the hottest market, there are homes that don’t sell.  (Some sellers fall for popular home selling myths that everything sells at every price, but it’s not true.)  If you have feelings of aversion to these bidding wars, do yourself a favor and ONLY look at homes that have been on the market 3 weeks or more.  Often the main thing wrong is an inflated price.  Some sellers won’t do an official price reduction, but may take a lower offer than you may think.  Some homes have just been hit with the Ugly Stick.  Ugly you can fix.  Often the Ugly Home will sell for a lot less because yes, it is not that heart warming and it is a lot of time, money, and effort to fix it up.  But guess what – it can be a great price and you won’t have to deal with competing bids in many cases.

Happy home hunting!

 

Related articles:

What are your cold feet costing you?

Why do sellers care if the offer has a loan or is all cash?

Shopping for what you can afford: how not to depress yourself while house hunting in Silicon Valley

Getting priced out of the market when housing prices rise rapidly

What are your cold feet costing you?It remains a strong seller’s real estate market in Silicon Valley, with many properties selling with multiple offers, but there’s an undercurrent of concern that we are the near the peak of pricing.  That has some buyers nervous (though most will quip that Apple and Google and others are still hiring, and the local economy is strong – so they are not too worried).  For those who are a little nervous, sometimes it turns into cold feet – and it’s costing them.

What we are seeing in terms of cold feet with Silicon Valley home buying:

This undercurrent is not being widely reported but we are experiencing it in our real estate practices as a few things have been taking place.

First, a larger than usual number of transactions have been falling through.  Many of these, though, are not recorded on the multiple listing service, as they take place right after an offer is accepted, so the listing agent and sellers turn to one of the other bidders and put them into contract within hours.  Because they aren’t recorded, it’s impossible to track – but the stories are out there of this happening more now than a year or two ago.

In other cases, offers are written and submitted but withdrawn before they could be countered or accepted.

And in others, buyer agents say that they will be submitting an offer, but on the day of offer presentation, the home buyers back out and the offer is never submitted.

In my experience, all of these things are happening “more than normal” right now.  A lot of it is not easily measurable.

Symptoms of cold feet to come

Home sellers want to feel confident when they accept a contract that it will stick, both because they don’t want the work or emotional upheaval associated with a transaction that falls through, but also because often the best price is the first price.  When a home ‘resells’, most of the time it is for less than the origanlly accepted bid.

For that reason, smart listing agents are looking for the symptoms of cold feet.  They’d rather not get their sellers into contract with nervous buyers who will change their mind about buying the house or condo.

Symptoms of nervousness about the property at an open house:

  • Dominating the listing agent’s time with incessant and low-level questions – best to give most of your questions to your own buyer’s agent, who will help you with them.   It’s good to ask about the home, the reports and so on, but you don’t want to take so much of the Realtor’s time that he or she cannot talk with others there.   Think balance both in terms of the time and the nature of the questions.   You want to present yourself as reasonable and easy to work with.
  • We often say that the longer a buyer stays, the more likely he or she is to write an offer.  This is true, up to a point.  Buyers who come to an open house and stay for 2 hours, or who make 4 or 5 trips to see the house go from looking interested to appearing unsure.

Symptoms of nervousness about the property (your potentially cold feet) when your offer is submitted:

  • Sending in an incomplete offer and supporting documents. If the listing agent requires proof of funds, provide it.  If the disclosures are to be signed, do all of them – not just the cover sheet.  Aim to be thorough, it will present you as serious.  It will also show that you are not a pain to work with, that you and your Realtor can follow directions and that the listing agent won’t have to chase down the paperwork later.  Go the extra mile, it helps!
  • Submitting an offer package “last minute”, without the buyer’s agent giving advance notice that it’s coming.  Related to this is seeing the property and reviewing everything well in advance, but only deciding a few hours before the deadline to actually write, sign, and submit the bid.   The serious buyers who are rock solid are the ones who know early on that they want the property and are committed to it early on.  Their buyer’s agent will let the listing agent know long before offers are due that these home buyers are going to bid on it.  One agent recently told me “my buyers are madly in love with the house” many days before the offer due date.  This makes a big impression on sellers and their agents.
  • If the buyer’s agent needs to call every few days to see how things are looking, it usually hints that the buyers are not too sure or that they will only write an offer if there’s limited competition.  The truly sure buyers plunge ahead despite competing bids or the lack of them.

Want to buy a home?  Try not to come across as skiddish to the listing agent!  Your cold feet may cost you the home, even if your offer’s got the highest price.  Home sellers and their agents want to feel confident that you will close on the sale if your offer is accepted.  Present yourself as serious, capable, reliable, and easy to work with and your odds of success will be increased.  At the end of the day, it is always “price and terms”, but never underestimate the influence that your behavior and your real estate agent’s behavior play into the overall package, because shaky buyers may not close the sale, but home buyers who are rock solid and madly in love with the house will.

Lastly, in an appreciating market, as we have right now, it should be noted that often the next house or townhouse or condo will be more costly or in worse shape than the one you could not decide to get serious about.  Stay nervous too long, and you could ultimately really impact how much home you can buy at all.  Worse yet, take too long and you may price yourself out of the market entirely.

Often the Silicon Valley real estate market takes a bit of a nosedive in December and January, only to make a comeback after the SuperBowl. Just now I ran the stats for the city of San Jose, which is big enough, at about 1 million people, to provide a good sense of the market generally.

Below please find a simple chart reflecting houses sold with the days on market and sale price to list price ratio.  You can see, clearly, that the SP to LP ratio dips noticeably in December & January, and also that the days on market rise.

Even so, how bad was it?  The average DOM was 38 (break-neck speed in any other part of the country) and the average SP to LP ratio fell to “only” 102%.

2016-3-1 San Jose Days on Market and Sale Price to List Price Ratio

 

That was it – that was the “break” that buyers get in winter.  Things are reversing course, as often they do in February, March, and April, and multiple offers with big overbids are again the major story in San Jose and throughout the Silicon Valley region. Just this last week I heard of a home in this valley that got 45 offers.

Home buyers, want to purchase this year?  Your best bet is to be financially well equiped with 25% down or more if you are buying in any of the hotter areas.  This is a nearly impossible market for FHA home buyers or for those with less than 20% down.

Home owners, want to sell this year?  You can maximize your return by doing smart fixes and thorough inspections to make buyers feel confident about purchasing your property.  That confidence can change the game and bring 10 offers where there might have been 5, and with the larger numbers of bidders usually there come also much larger sale prices.

Call me or email me if you would like to discuss working together and getting your best deal in the current Santa Clara County realty market.

Related reading:

Why do sellers care if the offer has a loan or is all cash?

Home selling? Small fixes that make a big, positive difference.

Shopping for what you can afford: how not to depress yourself while house hunting in Silicon Valley

 

Homes for sale in San Jose

  1. 3 beds, 2 baths
    Home size: 1,641 sq ft
    Lot size: 6,438 sqft
  2. 3 beds, 2 baths
    Home size: 1,356 sq ft
    Lot size: 8,637 sqft
  3. 2 beds, 2 baths
    Home size: 1,223 sq ft
    Lot size: 1,663 sqft
  4. 4 beds, 2 baths
    Home size: 1,376 sq ft
    Lot size: 6,098 sqft
  5. 0 beds, 0 bath
    Home size: 2,420 sq ft
    Lot size: 6,346 sqft

See all Real estate in the city of San Jose.
(all data current as of 7/22/2017)

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Why do sellers prefer cashBuyers who are getting slammed out of the Silicon Valley real estate market due to low inventory and multiple offers are extremely frustrated. In many cases, they write offer after offer, and each time not only are their bids rejected, but they never even get a counter offer.

You should not depend on getting a 2nd chance, of course.  Just because you write a contract on a San Jose area home does not mean that the seller needs to give you a counter offer.  Some agents and sellers don’t respond at all – not nice, but if you get dozens of offers, sometimes that does happen.  Sometimes they just take the best offer and run. Othertimes they only counter the best offer and forget the rest.

The question arises all the time: why isn’t my 20% down offer just as good as the 50% down or the All Cash offer? Isn’t 20% down good enough? Or for that matter, why wouldn’t a 3.5% FHA backed loan be suitable?

Cash is better because there’s less risk

Twenty percent down is “good enough” if there are no other offers. If it’s multiple offers, though, it’s probably not sufficient for most sellers provided that the all cash offers are written with realistic pricing. Right now, 25% of all sales in Santa Clara County are all cash, and sellers would far rather deal with an offer that includes no finance or appraisal contingencies.  For sellers, the fewer contingencies the better and no contingencies is ideal.  Particularly now, when we are seeing a very sudden and dramatic upswing in pricing, appraisal contingencies can kill an offer’s chances of success. With all cash, there is no appraisal at all – it’s a slam dunk on that front. Continue reading

If you are house hunting in the Cambrian area of San Jose, you are probably aware that home prices and the real estate climate generally differ based on a number of things, but the most important factor of all is the schools.   While it is helpful to view the Cambrian real estate market as a whole, it’s more accurate to look at a smaller segment of that realty market and study it by school district.

One data point we use to analyse the market is the absorption rate, or months of inventory.  The question is this: if no new inventory came on the market, how long would it take for the current supply of houses for sale take to sell, if sales continue at the same rate?  For this we look at the currently available list of homes for sale (some people including pending with contingency in place, but nearly all of these do close, so I omit them) and also those of the same criteria which have sold and closed escrow in the last 30 days.  The same study could be done on a weekly basis rather than monthly, but with such small numbers of inventory, that would likely not be so reliable.  I ran these numbers from MLSListings.com this morning?

Cambrian months of inventory by elementary school district as of 2-5-2016

Cambrian as a whole has 1.07 months of inventory – that’s pretty good if you are a seller, and a bit scary if you are a buyer.  A closer look, though, and you see quite a huge difference between either the Cambrian or Union School District, which both have a very brisk .83 months of inventory, versus the homes in the San Jose Unified School District area, which are moving at 3 months of inventory – a great market for most of the U.S., but sluggish compared to the other areas.

For a home owner wanting to sell in the SJ Unfied section of Cambrian, this is critically important information to understand so that you don’t overestimate the enthusiasm for your house.  It is going to be more important for you to price aggressively, stage well, market thoroughly than in the other areas, which may be more self-selling due to the very high quality of the public schools.

For a home buyer wanting to purchase in any of these areas, knowledge is power!  You might be able to get away with contingencies in your offers in the San Jose Unified neighborhoods as you may be the only offer in some cases, but that may not get you into your next home in the more competitive areas where many people are just trying to get their children into excellent schools and you’ve got multiple offers and overbids in that superheated market.   (We Realtors do not love seeing our buyers get into contract with few or no contingencies, by the way.  We prefer where there’s a little more balance.  This imbalanced situation is a classic case of supply and demand: too much demand, not much supply.)

Finally, it should be noted that schools are a major driver all of Silicon Valley.  I have similar studies, using high school districts, for Saratoga (on this site) and Los Gatos (on the Live in Los Gatos blog),  if you’d like to check those out also.  Because those areas have a really big spread in pricing, the absorption rates have been considered by price point too.

Check out what’s happening in the Cambrian market in the map below.

  1. 3 beds, 2 baths
    Home size: 1,356 sq ft
    Lot size: 8,637 sqft
  2. 3 beds, 3 baths
    Home size: 2,396 sq ft
    Lot size: 4,399 sqft
  3. 3 beds, 2 baths
    Home size: 1,275 sq ft
    Lot size: 6,934 sqft
  4. 3 beds, 2 baths
    Home size: 1,159 sq ft
    Lot size: 3,846 sqft
  5. 4 beds, 3 baths
    Home size: 1,782 sq ft
    Lot size: 6,499 sqft
  6. 4 beds, 2 baths
    Home size: 1,608 sq ft
    Lot size: 10,890 sqft
  7. 4 beds, 2 baths
    Home size: 1,868 sq ft
    Lot size: 5,998 sqft
  8. 3 beds, 2 baths
    Home size: 1,326 sq ft
    Lot size: 8,080 sqft
  9. 4 beds, 2 baths
    Home size: 1,830 sq ft
    Lot size: 12,501 sqft
  10. 3 beds, 2 baths
    Home size: 1,600 sq ft
    Lot size: 9,282 sqft

See all Real estate in the Cambrian community.
(all data current as of 7/22/2017)

Listing information deemed reliable but not guaranteed. Read full disclaimer.

Missing the markOne of the most frustrating experiences for Silicon Valley home buyers is to spend time and energy looking at homes that they simply cannot afford.  It happens all the time.  I’ll be the first to admit it’s not always easy. In fact, take a look at a couple of my posts (or at least their titles) and you can see the dilemma up front:

Sometimes the list price isn’t the expected sales price, so run comps!

Why looking at the comps may lead you astray in determining market value today

What’s a consumer to do?

YES, you should look at the comps. NO you should not only look at the comps!

Here are a few questions to consider:

  1. How’s the market heat?  Are the open houses packed? Are many homes getting multiple offers?
  2. What’s the list price to sales price ratio for homes in that area?
  3. Is there too much or not enough inventory of available homes?
  4. How many offers will there be? Multiples change everything!

If homes are often selling for over list price, it would be silly to assume that a property that’s only been on the market for a few days will sell for very much under list price. That’s even more true of the open house is packed!

In today’s hot sellers market, homes are not uncommonly listed below the expected sales price. Knowing the true market value is more important than the asking price.

Finding the sales price to list price ratio is easy – you can check it for various areas in Santa Clara County by visiting my Real Estate Report.  Right now, here are the ratios in the San Jose area:

All of Santa Clara County 102.4%
All of San Jose 102.1%
Los Gatos 99.1%
Saratoga 103.4%
Cupertino 106.6%

You get the idea.  Coming in at or under list price in this kind of climate will not make you, the buyer, look serious or knowledgeable if the listing is new and the property is in good shape. The same would be true in a calmer market if an offer came in at 95% or less.

Finally, understand the basics of “supply and demand”. If inventory is high, you can get away with writing a low offer and possibly seeing it work. But if inventory is chronically low, as it has been the past year, this won’t go over so well.  The number of anticipated offers will tell you what you need to know here!

A good real estate agent will assist you in understanding the probable market value for any home you’re thinking about buying. Although it’s an art as much as a science, it’s possible to get at least the right ballpark if you can measure all of these variables correctly.

Looking to buy in the current market? Check out some of my other articles through the links below.

How to fast-track your home buying: 6 steps

Is buying a home in late fall or winter a good idea, or is it better to wait until spring? (Hint: there’s no right or wrong answer)

And stay informed on the markets by following my Market Reports, many updated monthly.

Check out the sales and listings in Santa Clara County through the interactive map below.

  1. 3 beds, 2 baths
    Home size: 1,641 sq ft
    Lot size: 6,438 sqft
  2. 4 beds, 3 baths
    Home size: 1,538 sq ft
    Lot size: 6,098 sqft
  3. 4 beds, 3 baths
    Home size: 1,891 sq ft
    Lot size: 11,160 sqft
  4. 3 beds, 2 baths
    Home size: 1,356 sq ft
    Lot size: 8,637 sqft
  5. 2 beds, 2 baths
    Home size: 1,223 sq ft
    Lot size: 1,663 sqft
  6. 4 beds, 2 baths
    Home size: 1,376 sq ft
    Lot size: 6,098 sqft
  7. 0 beds, 0 bath
    Home size: 2,420 sq ft
    Lot size: 6,346 sqft
  8. 3 beds, 3 baths
    Home size: 1,890 sq ft
    Lot size: 1,995 sqft
  9. 4 beds, 2 baths
    Home size: 1,170 sq ft
    Lot size: 5,501 sqft
  10. 3 beds, 3 baths
    Home size: 2,396 sq ft
    Lot size: 4,399 sqft

See all Real estate matching your search.
(all data current as of 7/22/2017)

Listing information deemed reliable but not guaranteed. Read full disclaimer.

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Mary Pope-Handy
Realtor
ABR, CIPS, CRS, SRES
Sereno Group Real Estate
214 Los Gatos-Saratoga Rd
Los Gatos, CA 95030
408 204-7673
Mary (at) PopeHandy.com
License# 01153805


Selling homes in
Silicon Valley:
Santa Clara County,
San Mateo County, and
Santa Cruz County.
:
Special focus on:
San Jose, Los Gatos,
Saratoga, Campbell,
Almaden Valley,
Cambrian Park.
Let’s Connect
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The real estate search
Use the widget below to browse properties which are for sale, under contract (pending) or sold. Want to view only homes which are available now? Use the "find a home" link on the menu above (next to the "home" button).
Mary’s other sites & blogs
Valley Of Hearts Delight
Santa Clara County Real Estate,
with an interest in history

Move2SiliconValley.com
Silicon Valley relocation info

popehandy.com
Silicon Valley real estate,
focus on home selling

Silicon Valley Real Estate Report
Silicon Valley real estate
market trends & statistics
Mary’s Blog Awards
Top 25 real estate blogs 2016
2016: Personal Income's list of top 25 real estate blogs.


Best Realtor blog award
2016: Coastal Group OC's list of best Realtor blogs


The 2009 Sellsius list of top 12 women real estate bloggers
2009: Sellsius list of top
12 women real estate bloggers


Mary Pope-Handy's Live in Los Gatos blog won the 2007 Project Blogger contest, sponsored by Inman News and Active Rain

2007: Mary Pope-Handy and Frances Flynn Thorsen win the Project Blogger Contest for Mary's Live in Los Gatos blog. The contest was sponsored by
Active Rain and Inman News.


Non blog award


Best real estate agent in Silicon Valley from the San Jose Mercury News poll of readers in 2011
"Best real estate agent
in Silicon Valley"

2011 readers' poll,
San Jose Mercury News

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