It can be a little nerve-wracking to sell one home and purchase another at the same time. How do you buy and sell homes at once – without losing your mind?
Talk to a lender first
It is a very good idea to talk to a great lender upfront and to be pre-approved. That way, you’ll be more certain of what you can truly afford, and no matter which order you plan to do the two house juggle, you’ll be ready.
The main options when you want to buy and sell homes at once
These are the most commonly used strategies to buy and sell homes at once:
If you have equity, pulling money out of the current house may be an option, or perhaps you can use a bridge loan, you may be able to buy the next home first.
In that case, you can move to the new home, then stage and sell the current one. For most people, this is less stressful.
Or will you only purchase after you have cash in hand?
With this approach, you could move out and stay in a rental, stage and sell the home and then buy the next residence with cash in hand.
Or you could live in the home while it is marketed, sold, and closed.
You may be able to stay on after the close of escrow as a renter in your home for up to 60 days. That is often enough time to buy and close on the replacement property.
You might be able to have a longer close of escrow and be able to purchase the home “subject to the successful close of escrow” of the current place. This is not the most viable way to buy in our current, inventory starved market, though.
Another option is to move out, rent a temporary residence, sell, and then buy. Depending on the rental, your own belongings could furnish it, or you could have your things in storage.
Possible option 1 – buying first & moving out to sell
If possible, many people doing these two major transactions at once prefer to purchase first. the advantages include not having to move twice and not having to live in a home that is being shown, inspected, and requiring a pristine condition at all times. For people working from home and families with young kids, this is often the way to go, as it is too disruptive to live there during the marketing and sale process. (more…)
There are common or frequently asked questions read estate questions, or real estate FAQs, that arise for people buying or selling property here in Silicon Valley or the Central Coast, so I’ve assembled a list of real estate FAQs that I have written about here. Each link goes to an article on this website with more information.
Real estate FAQs relating to offers, contracts, etc.
Do you have a real estate FAQ that isn’t listed here? Please google the question with my last name, Pope-Handy, and there’s a good chance that I’ve addressed it here or on one of my other sites. Still no luck? Please shoot me an email and we can discuss it (and perhaps I’ll write about it).
Homeowners insurance is once again in the news, and home owners (as well as those actively wanting to buy or sell a home) need to know how this may impact real estate transactions. This type of coverage is also called Fire Insurance, though it does cover losses beyond just those caused by fire.
Several major insurance carriers have either stopped writing new homeowners insurance policies in California or are severely limiting the number of policies that they’ll write.
For property owners in the Very High Fire Hazard Severity Zone, this limitation of conventional coverage is causing insurance premiums to skyrocket, especially if the insurer or last resort has to be used, the California Fair Plan. We’ve heard of insurance costs going up 10 times the previous rate or more in some cases!
There are some other options, listed below, that may provide some possible relief.
Buying a home in an area with a higher fire risk? Find out about the insurability of the property BEFORE writing the offer.
Major Homeowners Insurance Carriers Pull Back
Allstate, State Farm, and now Farmers have all pulled back from writing new policies in the Golden State, either completely or partially, due to the fires of recent years and the financial liability that they have caused those companies.
We’re not really in new territory here. Over the last 35 years, we’ve had several cycles of difficulty with obtaining homeowners insurance. In California. In years gone by it was challenging to get it after the Loma Prieta and Northridge earthquakes in 1989 and 1994, respectively. When a spate of mold cases came up in California and Texas in the late 1990s and early 2000s there was also a pullback by insurance companies. (more…)
If a buyer wants to view a property, does the listing agent have to show it to him or her outside of regular open houses? The answer might surprise you! Here’s a quick overview:
The listing agent and seller decide about showings that the listing agent is expected to do. Does the listing agent have to show it privately, or during open houses, or only on one weekend before offers are reviewed?
The listing agent will make showings possible for buyer’s agents with instructions on scheduling in the comments that members of the MLS can read.
In many cases, the real estate licensee working with the home seller will hold the property open for the public on the weekend and sometimes mid-week as well. It may or may not be the listing agent holding it open.
For safety reasons, many listing agents will not have private showings with buyers whom they don’t know and who aren’t clients of theirs. Realtors are harmed every year in the line of duty.
For agency reasons, a listing agent who plans to only represent the seller may not want to have an appointment with a buyer who plans to write the offer with someone else.
There are many other reasons why the listing agent will not personally show the home for sale outside of open house times, but may be able to arrange for the buyers to see it with another agent.
When does the listing agent have to show it?
The most important thing for buyers to understand is that the accessibility of the home for viewings depends upon the agreement, verbally or in writing, between the owner of the property and the agent/brokerage hired to market, negotiate, and sell the real estate as to whether or not the seller’s agent is obligated to show it privately.
It’s not an “on demand” situation where an interested buyer can insist on seeing the property as desired. To make an absurd point, no one would say “doesn’t the listing agent have to show it to me at 10 p.m.?” Without any thought, we know that’s unreasonable. (more…)
Sometimes our clients present us with “THE VALUE” of property per one of these free online home valuation websites sites and in some cases, they challenge us to disprove it (Zillow says it, or some other site, so it must be right, goes the thinking). If they want to buy a house which is listed for more than the auto-comped value, it may cause some emotional anguish. And if they want to buy one which is listed for less, they may feel a little giddy – unless multiple offers are looming.
The same is true with home sellers. They agonize when Zillow, Trulia or some other big name site places a worth on their property which is less than what they feel it should be.
Often the best way to respond is to show many of the online valuations and not just the one the client is focused on (often that’s either Zillow or Redfin, but some are attached so some other site’s numbers.
What might surprise a lot of people is the huge discrepancy in values given.
Sample auto comp values online
A good exercise is picking a home that you know fairly well and then seeing what the online home valuation tools say for each one. I picked a home that I know and ran the address through several websites that provide automatic pricing info. Here are the results, from low to high:
Not included in online home valuation study:
Eppraisal $2,072,000 (too high)
Included in the online home valuation study:
Collateral Analytics (via Realtor.com) $1,671,000
CoreLogic (via Realtor.com) $1,631,300
NAR RPR $1,617,440 (subscription only for Realtors)
Quantarium (via Realtor.com) $1,566,759
Bank of America $1,504,391
(Please note: the Trulia home value estimator is the same as Zillow’s Zestimate because Zillow owns Trulia.)
From top to bottom, the amount varies by $217,409! That’s a 14% gap between top and bottom. Had we included Eppraisal, it would have been even crazier.
How can the online home valuations disagree so much?
CCRs are the Covenants, Conditions, and Restrictions (sometimes “Covenants, Codes & Restrictions”) for a neighborhood, subdivision, condo or townhouse community. They are drawn up by the builder or by a board comprised of the builder and a few others who want to set the neighborhood standards. Sometimes you’ll hear them called CC and Rs or CC&Rs.
The CCRs are put in place, usually for a set number of years such as for 30 or 35 years, with automatic extensions of a prescribed number of years (such as 5 or 10) unless the homeowners in that tract or area vote t hem out.
The weirdest time line I ever saw in CCRs referenced something like “until the death of the last living great grandchild of…” and it mentioned one of the Kennedys. Odd, but apparently legit.
What are the CCRs about?
Ordinarily the CCRs tell us that homes cannot be too small, that livestock cannot be raised at the property, that home owners may not drill for oil or water, and many other kind of common sense things. The older ones will also state that the house must have a minimum value – often so small it might make us chuckle.
Additionally, the covenants, conditions, and restrictions will state what kind of signage may appear (only for sale and for rent signs, for instance, no billboards), and normally there’s a admonishment against noxious or offensive materials such as rubbish piling up on the property.
Newer CCRs, especially in condo communities or townhouse complexes, may have restrictions on things like what color the curtains or blinds must be if facing the street (white or off white or beige only). Often they state that garage doors must be fully down except when vehicles are entering or exiting. Some communities, like Rinconada Hills in Los Gatos, do not permit you to park your vehicle in the driveway overnight – it needs to be in the garage.
Many disallow washing vehicles in the complex. Right now that’s moot since the drought has the water company prohibiting all of us from doing that.
Condo and townhome CCRs
In condominium and townhome complexes, the CCRs are crucially important! Some of them have rules like:
no more than 2 pets
dogs may not be of these breeds (list)
dogs may not weigh more than 20 pounds (or some other number)
laundry may not be dried on balconies
storage may not be left on balconies
laundry and dishwashers may not run after 10 pm
only people over the age of 55 (or some other age) may live at the complex
And MANY other clauses. Always always read the CCRs !
Illegal restrictions in the CCRs
Many years ago, some CCRs also had restrictions on who might buy or live in a neighborhood (racial, religious, and other restrictions). This is illegal today, of course, and so the first page of any CC&R document you see now will have a large disclaimer stating that any fair housing violations are illegal and are null & void. (At least it should be there.)
Since the C C & Rs “run with the property”, until recently we were told that they cannot be amended. Want to see the cover sheet itself? Now, though, thanks to recent legislation, those offensive restrictions can be stricken from the CCRs. (more…)
Interested in buying a rental property? The first question to ask is if you want to buy it for cash flow or for appreciation.
Here in Silicon Valley, most investment buyers are looking for long term appreciation rather than to get a monthly source of income. In some areas of the country, you can put a small down payment on a property and break even each month. In other areas, that would create a negative cash flow situation.
Here in Santa Clara County, and the greater San Francisco Bay Area, rental values are relatively low when compared to purchase prices. That translates to a much larger down payment being needed to break even each month, let alone have a positive cash flow.
Rental property down payment needed in Silicon Valley
Some consumers believe that a 20% rental property down payment would do the trick to get them started as a real estate investor since that’s the most common amount for owner occupied homes.
While 20% down may work in some places. In most of the U.S. you’ll need 30% down to be “cash flow neutral”, meaning that you aren’t losing money each month. In pricey Silicon Valley, though, often it takes more than a 40% down payment on an investment property just to break even.
A few years back, a friend and past client asked me exactly this question. At that time I did the math and it looked like she would need to put more than 52% down just to have a neutral cash flow. Today I’ve updated it.
Depending on where and what you buy for the $1 million budget ,I suspect that the amount of rent collected each month would probably run between $3,000 and $4,000.
Side note: with a condo or townhouse, insurance coverage is probably going to be a lot less costly than with a single family home. The estimates below are for a townhome.
If my calculations are correct, you really need to put more than 50% down to buy this particular Santa Clara County townhome and have it support itself.
Is that a good deal? Not really. At least not if your main focus is cash flow.
There are other places in the country where you can put a lot less down and break even or have a positive cash flow.
Of course, cash flow is one motivator. Another, though, is appreciation. Depending on your own goals, you may be far more interested in appreciation than cash flow. If that’s the case, Silicon Valley may be exactly what you’re looking for as an investment buyer. Those places where the down payment can be smaller may not have the same upside potential with appreciation as we have here in the San Jose area, or the San Francisco Bay Area as a whole.
Interested in becoming a real estate investor? Have a good down payment saved? Please call or email me and we can chat. If Silicon Valley isn’t the right place for you to make your real estate investment, I can introduce you to wonderful Realtors in other areas where the numbers may be more favorable.
Many Silicon Valley home sellers want to sell their homes “as is” (or “as-is”). And most homes in today’s market are. But what does that mean, exactly?
Does it mean that the seller has made no repairs or renovations before listing the home? Or that they do not have to disclose if something is broken to a potential buyer? No.
As is means that the home will be conveyed to the buyer at the end of the transaction in the same general condition it was in on the day that the buyers wrote the offer. If the roof has leaks, the crawl space is full of termites, and the appliances do not work, that is how it will be on the day escrow closes.
What it means is that the seller cannot let the property condition deteriorate during the course of the escrow.
The seller must continue to maintain the home and land in the same general condition. So if the lawn was green and well trimmed, the seller cannot suddenly let the grass die and neglect to mow it. If a baseball breaks a window after the buyer and seller have entered into contract, the seller must repair it. The condition will not have to be better, but it should not be worse than it was on the day the buyer and seller agreed on the price and terms of the sale.
While the contracts most agents use in Santa Clara County and nearby today have “as is” as the default sales agreement, that doesn’t mean all sales are as is.
A few years back I attended a property inspection in San Jose and we found an unwanted resident in the garage: a black widow spider. Needless to say, did not stick around after she was found!
In case you haven’t seen one, I thought I’d share the pic here (click to see more below). Sadly she wasn’t my last encounter with these spooky locals. In fact, I’ve been seeing all too much of them over the last three years! At least this time, we always found her outside.
What does it mean when real estate professionals, journalists and consumers refer to a “hot seller’s market“? Simply put, it means there’s an imbalance in the market which is very much in the seller’s favor. In terms of supply and demand, it translates to far more demand than available inventory for sale (supply). It’s a good time to sell, but a hard time to buy.
The Elements of a Hot Seller’s Market
We measure or note the market conditions using a variety of data points;
days to sell (and days on market for all homes, including unsold)
absorption rate (months of inventory, weeks or days of inventory)
number of listings available vs pendings and recently closed homes
rapid rise in home sale prices, especially if to unsustainable levels
number of offers received on a property at once (multiple offers)
buyers upping their price and improving their terms voluntarily, without getting a counter offer
buyers writing offers with few or no contingencies, fast close of escrow or other extremely strong terms
overall market trends of inventory lessening, prices rising, buyers getting more desperate – how all of these look when viewed as a whole
Basically, when buyers are competing against one another with multiple offers, when properties are selling quickly and over list price, and prices rise, the ball is in the seller’s court and you’ve got a hot seller’s market!
While some of the above can be easily tracked on our multiple listing service, some are not findable anywhere except in conversations with real estate agents who are actively working the market, writing and receiving contracts. What isn’t tracked includes the number of offers placed on a home for sale, whether buyers are engaging in “bidding war” tactics such as upping their price before even getting a counter offer, or offers with no contingencies.
Christie's International Real Estate Sereno, Los Gatos, CA 95030 408 204-7673 Mary@PopeHandy.com License# 01153805
Clair Handy, Realtor
Christie's International Real Estate Sereno 214 Los Gatos-Saratoga Rd Los Gatos, CA 95030 ClairHandy@sereno.com License# 02153633
Mary & Clair sell homes throughout Silicon Valley: Santa Clara County, San Mateo County, and Santa Cruz County. with a special focus on: San Jose, Los Gatos, Saratoga, Campbell, Almaden Valley, Cambrian Park.
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