How’s the market in the scenic Santa Teresa area of San Jose? The part of Silicon Valley is usually a bit “softer” as it’s farther from most work places and the school scores are generally not super strong, either. That being said, the Santa Teresa real estate market, like most of Santa Clara County, has been heating up all summer long. The average Days on Market are low at a mere 12 days. The sales to list price ratio remains well over list price at 105.2%. This shows that this seller’s market has not budged since last month. Santa Teresa is in a hot seller’s market.
Here’s quick view of the real estate statistic and trends for just the Santa Teresa area’s single family homes (houses / duet homes):
Santa Teresa real estate market stats & trends
|Trends At a Glance||Aug 2017||Previous Month||Year-over-Year|
|Median Price||$875,000 (-2.9%)||$901,000||$820,000 (+6.7%)|
|Average Price||$896,360 (-0.9%)||$904,667||$832,694 (+7.6%)|
|No. of Sales||25 (-7.4%)||27||29 (-13.8%)|
|Pending||23 (+15.0%)||20||20 (+15.0%)|
|Active||5 (-58.3%)||12||19 (-73.7%)|
|Sale vs. List Price||105.2% (+0.3%)||104.9%||100.9% (+4.2%)|
|Days on Market||12 (-6.7%)||13||27 (-55.1%)|
|Days of Inventory||6 (-55.0%)||13||20 (-69.5%)|
And from last month, for comparison, the Santa Teresa real estate market:
|Trends At a Glance||Jul 2017||Previous Month||Year-over-Year|
|Median Price||$901,000 (+3.9%)||$867,500||$795,000 (+13.3%)|
|Average Price||$904,667 (+0.3%)||$901,636||$803,583 (+12.6%)|
|No. of Sales||27 (-25.0%)||36||23 (+17.4%)|
|Pending||20 (-25.9%)||27||34 (-41.2%)|
|Active||12 (+71.4%)||7||28 (-57.1%)|
|Sale vs. List Price||104.9% (+0.5%)||104.5%||103.8% (+1.1%)|
|Days on Market||13 (-14.8%)||15||15 (-17.2%)|
|Days of Inventory||13 (+136.5%)||6||37 (-63.5%)|
You can read the Santa Teresa area real estate market report at this link if you’d like more details and statistical analysis. This particular page goes to the report for houses, but you can navigate home type to see condos/townhomes or any other area in San Jose, Santa Clara County, San Mateo County, or Santa Cruz County.
Sorting out the areas in Santa Teresa requires understanding multiple factors
Because this is a broad area, there are different school districts involved – Oak Grove and Morgan Hill, and those zones will have slightly different values themselves, of course (Morgan Hill is not exactly 2 minutes away, so schlepping kids that far south is a bit of a pain). Part of this area is in the east foothills, in Evergreen and close to Silver Creek, and part is almost in Coyote Valley, while other areas blur into Blossom Valley or creep into the foothills overlooking Almaden. All are specific sub markets so it’s important to run the data for whatever micro-market you are actually working in!
|Trends At a Glance||Aug 2017||Previous Month||Year-over-Year|
|Median Price||$688,000 (-8.1%)||$748,942||$547,500 (+25.7%)|
|Average Price||$653,857 (-6.7%)||$700,814||$567,539 (+15.2%)|
|No. of Sales||7 (-41.7%)||12||10 (-30.0%)|
|Pending||16 (+23.1%)||13||9 (+77.8%)|
|Active||2 (-60.0%)||5||16 (-87.5%)|
|Sale vs. List Price||104.1% (+1.5%)||102.6%||101.7% (+2.4%)|
|Days on Market||8 (-62.4%)||22||15 (-44.2%)|
|Days of Inventory||9 (-31.4%)||13||48 (-82.1%)|
And the Santa Teresa real estate market chart from last month condo sales:
|Trends At a Glance||Jul 2017||Previous Month||Year-over-Year|
|Median Price||$748,942 (+11.1%)||$674,000||$533,000 (+40.5%)|
|Average Price||$700,814 (+4.3%)||$672,235||$542,364 (+29.2%)|
|No. of Sales||12 (+20.0%)||10||11 (+9.1%)|
|Pending||13 (-23.5%)||17||10 (+30.0%)|
|Active||5 (+66.7%)||3||14 (-64.3%)|
|Sale vs. List Price||102.6% (+1.8%)||100.7%||104.3% (-1.7%)|
|Days on Market||22 (+2.7%)||21||7 (+205.6%)|
|Days of Inventory||13 (+43.7%)||9||38 (-67.3%)|
As you can see in the chart above, the condo portion of the Santa Teresa real estate market is also doing well. It is almost as hot as the single family housing market, which is uncommon, but happening more frequently in the current market. This is a definite seller’s market with properties taking just 8 days to sell at 104.1% of list price. In today’s condo market many areas are competing with the housing market and are much hotter than usual.
You’ll note that one of the four zips is super high – this is 95138, which has a number of homes in The Ranch, a subdivision in Evergreen near Silver Creek. The part of 95138 which is in Santa Teresa is considerably more affordable, well under $1 million in the vast majority of cases. So let’s take that one out so we can get a better feel for the true pricing of Santa Teresa homes.
Here two of the zip codes seem to be on track with each other, but 95123 is going at a different pace. Half of that area is Blossom Valley, which tends to be a stronger market. Regardless, it would seem that overall, the median list price of homes for sale in Santa Teresa has gone from the mid 700 thousands to the mid 800 thousands over the last year. And that’s about what I have seen, anecdotally, too.
Santa Teresa homes for sale
Interested in buying a house, townhouse or condominium in the Santa Teresa area? Below, please check out a list of available properties, listed in order of most recently added to the MLS first. Or better yet, call or email me to discuss working together!
$799,000 : 59 Grandwell WAY, SAN JOSE4 beds, 2 baths
$849,000 : 6510 Kona CT, SAN JOSE4 beds, 2 baths
$858,000 : 7 Cheltenham WAY, SAN JOSE3 beds, 2 baths
$1,050,000 : 7262 Basking Ridge AVE, SAN JOSE4 beds, 3 baths
$960,000 : 7564 Phinney PL, SAN JOSE5 beds, 3 baths
See all Real estate in the Santa Teresa community.
(all data current as of 11/20/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Hearing the real estate market “war stories” about dozens of offers on Silicon Valley properties and overbids ranging from 20 – 55% had convinced me that we were in a Silicon Valley real estate market bubble back in early 2013. At least, this is what a bubble looks like, sounds like, feels like, and acts like. At the time I thought, “how much longer could this continue?” Four years and counting – that is the answer.
I tell my family and friends that we are in “crazyland” as buyers purchase homes with no contingencies of any kind, houses sell in 10 days or less (if everything is right, which seems to be the case 75% of the time), and those same properties are selling at well over list price and with much more than 20% down.
The absorption rate, or months of inventory: it is a Silicon Valley real estate market bubble?
What do the numbers say? I just logged into MLSListings.com and see that right now, in all of Santa Clara County there are 817 single family homes (houses + duet or attached single family homes). The pending and contingent homes measure 1074, far more! That ratio alone suggests that the market is in overdrive. In the last 30 days, 950 single family homes have sold & closed escrow. So the months of inventory is 817 divided by 950 = .86 of a month of inventory, so about 3.5 weeks of inventory. (When I originally blogged about the potential bubble, it was 1.8 months of inventory.)
In other words, things are flying off the shelves. And they have been, with only a few minor blips here and there, since early 2012. Does that sound like a Silicon Valley real estate market bubble to you – a crazy strong seller’s market lasting 4.5 years? I could be wrong, but I think of bubbles as being something fairly swift, not a multi year trend.
Homes are selling faster than new ones are coming onto the market!
It’s one thing to say that one city, town, or school district has a very low months of inventory (or high absorption rate). It is another altogether to say an entire county is that low. This is a major trend, not a tiny blip in the statistics.
How soon we forget that after the outrageously deep seller’s market in 2000, we had a steep drop in 2001. Or that all the crazy buying in the San Jose area (and other places) in 2005-06, combined with bad financial regulations, lead to the crash of 2007-2009. But perhaps that enormous “correction”, in which Santa Clara County lost about 50% of its value on average, had more room to recover than we initially realized. Jobs keep flowing in, and housing starts are not keeping up. Supply and demand – the age old equation. That would seem to refute the idea that this is a Silicon Valley real estate market bubble. Perhaps low inventory and strong demand are what we should be expecting going forward. Continue reading
Recently I have been in quite a few multiple offer situations with my Silicon Valley home buyers (ranging to as many as 15 contracts on a Los Gatos house). Understandably, home buyers do not want to pay more than a home “is worth”. With several buyers all vying for the same property, though, the price is driven up. That’s a seller’s dream and a buyer’s nightmare. Is it possible to pay fair market value, and not more, with multiple offers?
What is fair market value?
With a little research, you may find a few slightly different definitions of fair market value. Most, though, include these elements:
In other words, fair market value is usually achieved when the buyer and seller have a normal sale, with normal time frames, normal contingencies, normal relationships to one another. Most of the time, this is the result of one offer on the house after a week or two on the open market.
If a seller or buyer is desperate to sell or buy, you probably won’t see fair market value. Similarly, if a parent sells the family home to a son or daughter, there’s a good chance it will never be a matter of exposing it to the pool of buyers, and the price is likely to be soft. Off market sales may be on the low side, though recently we’re seeing buyers in those circumstances paying more just to secure the property. A buyer who writes an offer subject to the sale of her or his home will be at a negotiating disadvantage, but a seller may accept that bid if the home has been on the market awhile, there is no other competition, and if the sale price is higher than it otherwise would be. (They’ll accept more risk for a higher sale price.)
With multiple offers, usually there is undue pressure on the buyer to compete with better terms (few or no contingencies, faster than normal sale, buyer picking up more of the seller’s costs) and better pricing. Nearly always, bidding wars will result in a sale price that is more than fair market value. Frequently there’s a “band of pricing” which is above the list price. Most home buyers will fall into that range, and when a home has been listed a little on the low side, this band may represent fair market value. This can be far exceeded if one super motivated person, an outlier, spikes the price.
In summary, residential real estate sales that take place with multiple offers will usually be with terms that strongly favor the seller and with a price that is above fair market value. It is not usually possible to pay fair market value with multiple offers – most of the time, the property will sell for more than fair market value.
Silicon Valley buyer and seller advice
Fiscally conservative home buyers in Silicon Valley will find this a very frustrating and discouraging situation as they write offers for “fair” prices and find them too low each time – and to see prices rising! When that happens, the more offers they write and the longer they take to buy, the more expensive it becomes to purchase anything at all. Today we have the double whammy of rising interest rates, too. My best advice is to find a property in a good location with fixable defects (such as an ugly kitchen, not a location problem, which you cannot change) which has been on the market more than 3 weeks. In that case you will probably have no other competition and can pay what is fair market value rather than an inflated price to due multiple bids.
Conservative home sellers are sometimes afraid to slightly underprice their property to attract multiple offers. That is understandable, so I would suggest never putting a price on the home that you wouldn’t actually accept. There are many things you can do to get your home to sell fast (within 2 weeks) and which will attract a few buyers. Those aren’t so risky but they do involve some work. If your property looks like “the best deal”, you can be sure that the home buying public will notice. Just don’t undermine yourself by being present at showings, making it too hard for buyers to see your property, or not making the home attractive and risk free to home buyers. I have written many articles on how to attract buyers who will pay top dollar – you can google “pope-handy home seller tips” or start with this piece: How to make people line up and beg to buy your home.
For more reading:
On this site: All comps are not equal
On popehandy.com: How much is your home really worth? (Discussion on fair market value vs appraisal value in addition to other factors)
Many 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.
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:
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.
- There may be an offer with great terms (
- all cash , no contingencies, or?) but a price that’s not quite right. That buyer may only get a counter based on price.
- 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.
- 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.
- 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.
- 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.
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:
- 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.
- 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.
- 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.
- 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:
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!
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%.
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.
Homes for sale in San Jose
$1,049,000 : 1034 Spencer AVE, SAN JOSE3 beds, 1 bath
$1,258,800 : 1584 Keesling AVE, SAN JOSE2 beds, 1 bath
$1,095,000 : 3390 Moorpark AVE, SAN JOSE0 beds, 0 bath
$1,149,900 : 3224 Foxboro PL, SAN JOSE4 beds, 3 baths
$138,888 : 555 Umbarger RD 118, SAN JOSE2 beds, 1 bath
See all Real estate in the city of San Jose.
(all data current as of 11/20/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Home buying is challenging for everyone in Silicon Valley: prices are high, inventory is low, and homes sell fast and usually with multiple offers, so decisions must be made quickly. Additionally, all the information on properties for sale is given up front, so San Jose area real estate consumers must read and digest hundreds of pages of inspections, disclosures, and reports for each house which is a serious contender. Most of the time, prospective buyers don’t get the first home on which they bid, so it’s a painful process which may be repeated a few times before success is had.
If you are someone who wants to be decisive without taking 6 months and 5 offers to get into a home, there are ways to wisely shorten the learning curve and the process generally. Sometimes people relocating here for work don’t want to rent and then buy – they want to buy quickly so that they can get kids into schools, establish neighborhood ties and generally begin their life here fully without having to prolong the house hunt. Sometimes that is not the case, it’s just a buyer who doesn’t want to make house hunting his or her main hobby for the forseeable future. No matter the reason, here are some ways you can speed up the process.
First, list your priorities: things you must have, things you’d like to have, things you do not want, things you absolutely will not accept.
Second, rank them in order. (Often certain things will tend to go together, such as better schools and lower crime.) This part can be difficult but is extremely important. Every home purchase involves compromise on something, whether it’s size, condition, location, walkability, price, schools, etc. Home buyers may find themselves with tradeoffs, so this is where you must have your ranking of priorities set. For instance, perhaps
- you can get one more bedroom if you’re willing to buy on a slightly busier street OR
- that same home might be remodeled from top to bottom if it backs to high voltage power lines OR
- you could buy a 1200 SF house in downtown Los Gatos that needs to be rehabbed or you could get 1800 SF of livable home for the same amount 4 miles away
- you could have a short commute and buy a condo or a 45 minute commute and get a house
Frequently, people struggle with ranking. I have often heard people say “I want everything on my priorities list”. For almost everyone, eventually, something will have to give, so the sooner you know where you will compromise, the better. Often home buyers who want to purchase in Cupertino, Sunnyvale, or Mountain View recoil in horror when they find what their money can buy there – and end up purchasing in Los Gatos, Cambrian, or Almaden instead, resulting in the longer commute but nicer home for the money. To be successful, it is crucial to rank, so the sooner you can do it, the better.
Third, hire a good Realtor early on. A lot of home buyers in the South Bay are running around, looking at open houses but getting no personal, professional guidance. They may not understand what a good buyer’s agent can do for them. They may incorrectly believe that a Realtor working with a buyer is just a glorified driver, taking them from home to home and then getting a commission when something is bought. I’ve written about this misperception (and the idea that some buyers have that “everything is on the web” so a buyer’s agent isn’t needed) but would like to simply state that this is an expensive and time-wasting misperception. Continue reading
Home buyers who feel confident about the market generally may buy, but when they have a lack of confidence that properties are holding their value, they don’t – even though a “buyer’s market” is often a great time to purchase real estate!
Silicon Valley home buyers who are confident about a particular property are more likely to pay more and to go into the bidding process with fewer contingencies and shorter contingencies, if any at all. When they lack confidence in a property, the seller’s truthfulness, the listing agent’s professionalism, in the neighborhood or in the real estate market itself, they either don’t bid or they bid low.
Home sellers who feel confident about a buyer and that buyer’s financial abilities are more likely to choose him or her over others. They want to feel that the buyer can perform, that the sale will close and there will be no “re-negotiation” are more likely to accept that offer than one which is riskier. Sellers know that when a home falls out of contract, it often sells for less the 2nd time – so they do not want the sale to fall apart. For that reason, most of them now want offers which are without any contingencies (or perhaps very short ones).
They also want the most money possible, of course, but if it’s neck and neck between the higher price with worse terms or slightly lower price with stronger terms, they will either counter the lower price up a little or they will outright accept the offer with more security of closing.
Often with multiiple offers, there will be a solid “band of pricing” where most home buyers seem to think the value lies. Then there will be one or two who are higher. Maybe one will “spike” the price. But if the spiked price comes with an appraisal contingency, it is really a mirage, an illusion, since the price will likely be renegotiated later. When listing agents see that kind of spread in prices offered, most of the time they’ll try to get the people with the best terms to move up in price. It may not go all the way to the spiked price which is laiden with contingencies, but it will probably move in that direction.
What can San Jose area buyers and sellers do to improve their odds of success? I would say the number one thing is to improve the sense of confidence on the other side of the bargaining table.
What can Silicon Valley home sellers to do enable buyers to feel confident (and to pay top dollar)?
Home sellers can increase the confidence levels of buyers by doing the following: Continue reading
This is the kind of market where you really need to try harder if you want to get the home. You don’t want to cut corners, and you don’t want your real estate agent to cut corners, either.
One buyer couple did come see the property during my open house. (A “blind offer” is when the buyers write offers on homes that they haven’t seen.) Their agent never did, though. She did not visit during the 2 open houses and she did not preview at any other time, either. She did submit an offer on a property which was, for her anyway, “sight unseen”.
Let me tell you, that kind of thing does not impress a listing agent who wants to know that there’s going to be a solid professional on the other side of the transaction. The listing agent is going to be less enthusiastic about working with someone who seems either unprofessional or lazy or unmotivated to do a good job. (What kind of advice could she have given her buyers if she never saw it in person, never saw the neighborhood?)
Most of the time, the buyer’s agent’s laziness or lack of professionalism will not obstruct the transaction if the buyer has by far and away the best offer. However, if it’s neck and neck, that’s the kind of thing that can get your offer eliminated. Would you want to lose the opportunity to buy because your agent could not be bothered to drive over and take a look and hopefully advise you about what she had seen?
Sometimes when a buyer loses out in multiples, it’s not so much that it’s a bad offer as it is a badly performing buyer’s agent. Want the house? Everyone on your team must exert a little more – your buyer’s agent, your lender, and you. Don’t cut corners. In an appreciating market, those short cuts are mighty expensive.
More on buying a home in Silicon Valley:
$3,499,000 : 18792 Withey RD, MONTE SERENO3 beds, 3 baths
$6,988,000 : 18335 Lexington DR, MONTE SERENO6 beds, 6 baths
See all Real estate in the city of Monte Sereno.
(all data current as of 11/20/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.