Buying Tips

Tips for Silicon Valley Home Buyers

LowballSilicon Valley real estate offers few simple answers but many recurring questions. One of them is whether or not you should write a “lowball offer“. So the first question is this: what makes an offer a lowball one?

It’s entirely relative to how the market in that area (not the county, not the state, but that particular area) is selling.  If houses in one area of San Jose are selling within 1% of list price and you come in 5% under, the seller may feel insulted.  But if properties are routinely selling at 10% under list price and your offer is at 13% under, that’s not such a big deal. So keep an eye on that.

As a reality check, though – right now, and for the last year or so (as in this glance back to March, 2015), most homes in the Bay Area are selling OVER list price. Houses in Santa Clara County in March 2016 (San Jose, Los Gatos, Saratoga, Santa Clara, Sunnyvale, Cupertino etc.) sold, on average, at 105.3% of list price and condos at 105.5% (these numbers come from my ReReport, updated monthly at popehandy.rereport.com/).  If homes are routinely coming in at or over list price, and you bid 3-5% under, and ask for a Section 1 pest clearance, or other contingencies, etc., this could be viewed as “lowball” given the current real estate market conditions in Silicon Valley.

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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.

multipleoffers3 300x170 - Why do you keep losing out on multiple offers?

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

Fear of Peak PricingA question I’m getting a lot lately has to do with when the Silicon Valley real estate market will peak.  We’ve had 4 straight years of very strong appreciaion. In east Los Gatos, houses that were selling in early 2012 for about $1,000,000 may now sell for $1,500,000. Consumers have to ask: where will it end?  When do people simply refuse to pay, and move elsewhere?

I don’t have a crystal ball, but I have experienced downturns, and on average they seem to happen about every 10 years in the San Jose – Santa Clara County area.  Usually the “runup” between the downturns is a ton more than the correction.  Often the price rollback is about 10%, while the 10 year period between price corrections might be 30-50%.

Yes, a correction is probably coming.  Yes, our prices are out of control due to a lot of hiring locally and fantastic interest rates combined with a terribly tight inventory.

When? When will prices come back down to earth?

My best guess – and that’s all that it is – is that it will be sometime in the next 2 years or so. Probably not this year because Apple and Google seem to be hiring like crazy (and they are not alone).  Maybe it’ll be in 2017.  Maybe 2018.  But I think before spring 2019. That said – I could be wrong.

Should you wait to buy, then?

Nope.  In my opinion, if you want to make a life for yourself here and plan to stay put 5-10 years, go for it.  Interest rates are good now and may not be in 2 years.  Prices are still climbing.  And heck, if you can stay put for 5-10 years, even if you do buy at the beginnig of a correction (which I did in 1989), you’ll be ok if you can buy and hold.  And the bonus is that in the meantime, if it’s an owner-occupied property, you get a nice tax benefit (talk to your CPA or tax professional about that.)

 

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. 2 beds, 3 baths
    Home size: 1,288 sq ft
    Lot size: 544 sqft
  2. 5 beds, 3 baths
    Home size: 2,239 sq ft
    Lot size: 6,015 sqft
  3. 2 beds, 2 baths
    Home size: 1,722 sq ft
  4. 3 beds, 2 baths
    Home size: 1,252 sq ft
    Lot size: 1,106 sqft
  5. 4 beds, 2 baths
    Home size: 1,440 sq ft
    Lot size: 6,150 sqft

See all Real estate in the city of San Jose.
(all data current as of 5/22/2018)

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, 1 bath
    Home size: 1,102 sq ft
    Lot size: 5,248 sqft
  2. 3 beds, 2 baths
    Home size: 1,591 sq ft
    Lot size: 6,102 sqft
  3. 5 beds, 3 baths
    Home size: 2,621 sq ft
    Lot size: 9,474 sqft
  4. 4 beds, 2 baths
    Home size: 1,734 sq ft
    Lot size: 8,080 sqft
  5. 3 beds, 2 baths
    Home size: 1,232 sq ft
    Lot size: 6,098 sqft
  6. 3 beds, 2 baths
    Home size: 1,655 sq ft
    Lot size: 9,265 sqft
  7. 4 beds, 3 baths
    Home size: 1,713 sq ft
    Lot size: 7,318 sqft
  8. 3 beds, 3 baths
    Home size: 2,705 sq ft
    Lot size: 10,624 sqft
  9. 3 beds, 3 baths
    Home size: 1,748 sq ft
    Lot size: 1,890 sqft
  10. 3 beds, 3 baths
    Home size: 2,396 sq ft
    Lot size: 3,118 sqft

See all Real estate in the Cambrian community.
(all data current as of 5/22/2018)

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. 4 beds, 3 baths
    Home size: 1,877 sq ft
    Lot size: 12,536 sqft
  2. 5 beds, 3 baths
    Home size: 2,239 sq ft
    Lot size: 6,015 sqft
  3. 2 beds, 2 baths
    Home size: 1,722 sq ft
  4. 3 beds, 2 baths
    Home size: 1,252 sq ft
    Lot size: 1,106 sqft
  5. 4 beds, 2 baths
    Home size: 1,440 sq ft
    Lot size: 6,150 sqft
  6. 3 beds, 2 baths
    Home size: 1,578 sq ft
    Lot size: 6,412 sqft
  7. 6 beds, 4 baths
    Home size: 3,365 sq ft
    Lot size: 1.35 ac
  8. 3 beds, 2 baths
    Home size: 978 sq ft
    Lot size: 5,201 sqft
  9. 3 beds, 1 bath
    Home size: 1,085 sq ft
    Lot size: 8,115 sqft
  10. 3 beds, 2 baths
    Home size: 1,248 sq ft
    Lot size: 6,612 sqft

See all Real estate matching your search.
(all data current as of 5/22/2018)

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

Silicon ValleyWhen are property taxes due in Silicon Valley?

Silicon Valley is not a governmental area, like the City of San Jose or San Mateo County.  Silicon Valley includes virtually all of Santa Clara County, most of San Mateo County, and parts of Alameda County and Santa Cruz County. Property taxes, or real estate taxes, are paid to whichever California county the home or land is located.  Luckily, all four of these counties work off the same basic set of dates.

Fiscal year for real estate taxes and due dates:

The fiscal year for the county tax assessor’s office begins July 1st.  Property taxes are billed in two installments.  The first one covers July 1st to December 31st, and the second one begins with January 1st and runs through the last day of June.

  • The property tax bill for the first installment is due November 1st and is late if not paid (or postmarked) by December 10th at 5pm.
  • The second installment of real estate taxes is due February 1st and is late if payment is not received or postmarked by April 10th at 5pm.  (This one fools people because U.S. income taxes are due April 15th, so be extra careful!)

Should the delinquent date fall on a weekend or holiday, the deadline falls to 5pm the next business day.

What happens if the payment is late?

If your payment is late, there’s a 10% penalty (and an administrative fee may be charged for processing the late payment as well).  If taxes aren’t paid by the end of the fiscal year, the property is then “in default”.   Eventually, if the tax isn’t paid, the home may be foreclosed on by the tax assessor’s office, though ordinarily this may take years and the owner’s credit can be damaged significantly in the process.

Other dates to know

Property taxes are mailed in September and October and should arrive before November 1st.

Property tax bills become a lein January 1st.  Don’t be offended, it’s just a bill that is always due!

January 1st is also the assessment date, meaning that is the date when the county tax assessor’s office figures out the taxable value of your condo, townhouse, house, multiplex, etc.   When you get your assessment, it’s the perceived value as of January 1st that year.

Supplemental taxes

If you just bought your home, the tax rate applied at closing was the former owner’s rate, which normally will be lower than the new rate due.  A few months later, when everyone has forgotten about it, a Supplemental Tax Bill comes in the mail.  That’s a one-time “catch up” bill and after that you’ll get taxed at the rate you should have been since you bought, which is appx 1.25% of the purchase price for the first year. After the first year, taxes can rise only 2% per year from that initial value*, even if the home appreciates much more.  (This situation inclines people not to sell and is part of the reason for our housing shortage.)

This is Silicon Valley and really we ought to be able to get that calculated at closing, but for some reason, the systems in place cannot seem to muster it.

*If there’s a decline in value such as we saw in The Great Recession, people may appeal their assessed rate and get a lower tax rate.  When values rise again, the 2% constraints will not be in place as such.  Real estate property taxes can jump up a lot, but not more than if they had been climbing 2% per year during the correction.

View what’s on the market in Santa Clara County through the map below:

  1. 2 beds, 1 bath
    Home size: 746 sq ft
    Lot size: 736 sqft
  2. 2 beds, 3 baths
    Home size: 1,125 sq ft
    Lot size: 574 sqft
  3. 2 beds, 3 baths
    Home size: 1,201 sq ft
    Lot size: 736 sqft
  4. 3 beds, 2 baths
    Home size: 1,592 sq ft
    Lot size: 6,547 sqft
  5. 0 beds, 0 bath
    Home size: 2,400 sq ft
    Lot size: 4,743 sqft
  6. 4 beds, 3 baths
    Home size: 1,743 sq ft
    Lot size: 1,916 sqft
  7. 4 beds, 3 baths
    Home size: 2,277 sq ft
    Lot size: 8,424 sqft
  8. 4 beds, 3 baths
    Home size: 1,506 sq ft
    Lot size: 1,633 sqft
  9. 3 beds, 2 baths
    Home size: 1,183 sq ft
    Lot size: 6,076 sqft
  10. 2 beds, 1 bath
    Home size: 920 sq ft
    Lot size: 927 sqft

See all Real estate in the city of Santa Clara.
(all data current as of 5/22/2018)

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

Translation

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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.
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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 of 2018 by RentPrep2018 RentPrep.com's list of top 25 real estate blogs to follow


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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