It’s a red hot seller’s market in Silicon Valley right now, meaning that there are more buyers hunting for just the right property than there are listings available. The end result is multiple offers, bidding wars, pre-emptive offers and rapidly escalating real estate prices in many areas and segments of the market.
When there are lots and lots of bids on a San Jose area home for sale, what do home sellers do? Most of the time, sellers begin with an “elimination list”. That is, they start by deciding what they do not want to deal with. The more offers there are, the more critical this becomes since sellers normally don’t love the idea of reading 10 or more stacks of offers. (Remember, the confused mind says no!)
Sellers need to simplify their choices, and one of them is by eliminating the worst offers first. A question for you to consider, if you’re a home buyer in Los Gatos, Saratoga, Campbell or anywhere in Silicon Valley is this: is your lender keeping your offer from getting accepted? Does your lender make your offer worse to the seller? Sometimes that is exactly the case.
In some cases, certain banks or even credit unions are falling into the “elimination” list for some sellers as their agents may have advised them those lending institutions are slow or difficult. Most of the time, these are the big banks – the ones that REO or short sale listing agents are demanding that consumers use for a pre-approval for submitting offers: Bank of America, Wells Fargo, and sometimes others, too. If the listing agent has had a bad experience with the buyer’s lender, there’s a very good chance that the offer in question will have much lower chances of success in multiple offers.
What’s a buyer to do? Should you work with a direct lender (bank or credit union) or a mortgage broker? Yes. Sorry, lender friends, but maybe the answer is both. At least if you’re shopping all sale types (regular and distressed properties) in Santa Clara County. For purchasing short sales or bank owned homes, you’ll pretty much be forced to use a direct lender. For regular sales, much of the time it’s not a huge plus to be with direct lenders in some cases because they have been extremely difficult for real estate professionals to deal with in the last year or two when it comes to funding loans.
Last fall, for instance, I had buyers who were using B of A on a great sale where they were putting 2/3 down and had only a small conforming loan. It was to be a 30 day close of escrow, but it morphed into a 45 day transaction due to repeated mistakes and omissions by the bank. (Luckily the lender did pick up the tab for those damages, but it was very stressful and upsetting for all.)
I have never been a fan of “double apping” for a loan but in these days, it might be the best course of action for San Jose area home buyers who are bidding on both regular and distressed properties. At the same time, there are some mortgage brokers who ALSO work as mortgage bankers, funding their own loans so that they can close faster. That might do the trick for the short sales and REOs, though most of the time the listing agent demands a “major bank”. Alternatively, you might try working with a smaller, local bank (coming to mind: Bank of the West) that doesn’t have the nightmarish reputation of the giants.