If you are purchasing your Silicon Valley home “all cash”, you will be in a stronger negotiating position.  Most of the time, you will get a slight discount on the price and the escrow period should be smoother as there will be fewer hurdles with no financing contingency.  Sellers always welcome cash offers, especially now.

What do you need to know if writing an all-cash real estate offer?

First, make sure you really do have your funds available or “liquid”.  Sometimes buyers think that because they have stock worth a certain amount of money, funds in an overseas bank account or equity in another property they will have access to that cash almost immediately.  It often doesn’t work that way.

Large sums of money coming from out of the United States may have to sit in a bank account for some time, possibly 30 days.  Domestic wire transfers usually have little or no hold time. Is your money overseas? You may want to consider moving it well in advance of the close of escrow. Speak with your escrow officer and Realtor about the details. (more…)

You’ve probably heard the fable, told as a children’s story or verse, “For Want of a Nail“.  This little parable applies to real estate sales in Silicon Valley, too.

The moral of the story is that something small and seemingly insignificant can have enormous repercussions.  The end result may not be quite so dire as the loss of a kingdom, unless of course you are referring to another old adage, “a man’s home is his kingdom”.

With real estate transactions being so involved today – many different people involved at different levels, loads of disclosures, reports, documents, inspections, escrow instructions, lender requirements – and the changing rules under which the game is played, it’s not too hard to suddenly get into a situation you hadn’t seen coming.

Realize that it COULD happen.  Whether or buying or selling a house in the San Jose – Los Gatos – Saratoga area or anywhere nearby, you would be wise to know that the odds are good that at some point, some strange and unforeseen issue will rear its head and surprise you (and your agent, lender, etc.) and cause everyone involved a little stress.   (more…)

It seems like a simple enough question: “how long does it take to buy a home in Silicon Valley?”  (Not how long to find the perfect house or condo, but how long from the time the offer is accepted until the sale is finalized and you can move in.) The answer has a few factors which can swing the outcome one way or the other, making the escrow time frame short or long.

Variables that make home buying faster or slower:

• whether or not the seller has pre-sale inspections (with a short sale, usually not)
• whether or not the home is a condo, townhouse or PUD (and if so, if the HOA docs are available upfront or are only ordered once the offer is accepted)
• whether the buyer is only pre-qualified or fully pre-approved for a loan
• the amount of cash down – an “all cash offer” can make the sale very, very fast
• the loan type – an FHA loan will need more time to be processed and the sale will close slower
• the contingencies involved and their time frames as written in the contract
• the sale type: regular vs short sale
• buyer needs or seller needs unrelated to the transaction: they can agree on a somewhat longer escrow in the contract (purchase agreement) if so desired
• if it’s a special type of property, such as a luxury home or estate OR a mountain property, there may be additional inspections needed and it could take a little longer to close on these as well

The fastest home sales I’ve seen are the all-cash offers of houses (not townhouses or condominiums) in which the seller already has excellent home inspections (my fastest listing that sold: 5 days, all cash, buyer HAD to buy within a week or would suffer enormous tax penalties). (more…)

Silicon Valley home owners who are thinking of putting their properties on the market are wondering a few things:

• how much is my home worth?
• how long will it take to sell my home?
• how long will it take to close escrow?

Today we’ll discuss how long it takes to sell a home in the San Jose – Silicon Valley areas.

Of homes that have sold and closed in Santa Clara County, the speed of sale and the pending sale time frame depend a lot on the sale type. 

• For short sales, San Jose area homes are typically on the market for about 123 days, then once they are sale pending, it’s approximately 100 days until close of escrow.  Start to finish, it’s about 8 months long! 
• For bank owned properties in Santa Clara County, days on market are often around 75 and the length of escrow 38 days.
• With regular sales, the DOM is a quick 51 and length of escrow averages 39 days.  
• For all sales, the Days on Market was 113.

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How many home buyers and sellers understand what a default is?  Consumers often confuse the term default with cancelling the sale at any time – even backing out of a contract during the contingency period for a legitimate reason.  Cancellation does not always mean default, though – there are some  fair ways and times to get out of contract without it being a default. 

Default is a strong word which refers to a failure to do something promised in contract or not doing it on time; we sometimes call it “non-performance”.  In the purchase agreement, buyers and sellers both make promises to do certain things within a certain timeframe, so either one could potentially default.  For instance, the following items are areas where a buyer could default:

• not putting the initial deposit (good faith deposit) into escrow on time
• cancelling the sale after removing all contingencies or without cause allowed by the contract
• not removing contingencies on time (or possibly ignoring other deadlines)
• not completing loan papers on time

Missing contingency removal deadlines may be a default.  For instance, the PRDS contract states on page 1 of that agreement:

BUYER’S  FUNDS:  Buyer  represents  that  all  funds,  including  deposits,  cash  balance,  and closing costs, will be readily available as “good funds” (as determined by Escrow Holder) at  the  time  of  payment.  Obtaining  these  funds  is not a contingency of this Contract.

The loan approval, though, may be indirectly tied to whether or not the buyer liquidates stocks or other accounts to provide the downpayment.  What happens if the loan is fully approved except for the verification of this downpayment?  The buyer’s job is to have the funds available so that obtaining them later does not cause a delay.  If a delay is caused because the buyer didn’t get the funds ready on time, that is a buyer default.

Not every default is an equally grave problem, of course.  In the case above, the buyer can go ahead and remove the loan contingency and continue to liquidate the downpayment assets (which should have been done much earlier in the escrow).  BUT, if the buyer does not complete the sale due to a problem with getting those funds, his or her good faith deposit will be at risk via the liquidated damages clause because getting those funds is not a contingency.

Sellers, too, can be guilty of defaulting on contractual promises. Here are some areas in which a seller could default:

• not moving out on time
• not providing completed disclosures or reports on time
• not having work done which was contractually required (such as pest work or repairs)
• not keeping the power & water on for inspections and final walk through
• causing a delay in closing due to not signing off on time

In Silicon Valley, there are two purchase agreement forms in use: the California Association of Realtors (CAR) contract and the Peninsula Regional Data Service (PRDS) contract.  Generally speaking, the PRDS & CAR contracts are similar on many points.  They are not so similar in the treatment of defaults, though.

Oddly, the CAR contract only mentions the word default twice, and in both cases the topic is a buyer’s default, first in the liquidated damages paragraph (25) and next in the other terms & conditions paragraph (27).
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Many, many years ago, when I was a new agent, a friend of mine (who wasn’t a Realtor) suggested to me that being a listing agent takes knowledge and skill but “anyone could drive buyers around in their car”.  I was stunned that she could think that buyers’ agents do nothing more than drive from house to house and unlock doors for people. 

Lockbox and Keysafe Set

Last weekend I held a listing in Saratoga open and a young couple asked me if I could work with them in writing the offer on that home.  This happens a lot – buyers are out searching on their own, independent of any professional real estate guidance, and when they find a home they like they just “use” the agent who’s got the listing.

Apparently, the old view and the current one aren’t so different from each other.  It amounts to this: who needs a buyer’s agent?
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How long does it take to buy a home in Silicon Valley?  There are really two questions within that one: first, how much time will be required before you’re ready to choose a home to purchase (or how many homes will you need to see), and then how much time is involved in getting the transaction closed.

Prior to this housing crisis, the national average used to be seeing fewer than 10 homes in order to make a decision.  The number of homes now visited (and the time) has been rising, though.  According to the California Association of Realtors, “On average, home buyers spent 8.4 weeks considering buying a home in 2009, compared with 7.2 weeks in 2008. Buyers spent an average of 10.3 weeks searching for a home with their REALTOR®, compared with 8.7 weeks in 2008.”

Often my clients need to see between 10 and 20 homes before they feel like they know the market and the choices well enough to select a home they want to write an offer on.  Depending on how broad of an area they’re considering, and how much of a hurry they’re in, this varies from couple of weeks or less – or a couple of years!  Clients relocating to the San Jose area often want to settle in.  If they’ve owned homes before, they may have a perfect idea of what will and won’t work for them.  Once I sold a Los Gatos house to a couple before the wife ever saw the property!  They moved every couple of years, the husband knew his wife’s requirements perfectly and they had no trouble being expedient. 
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