Getting A Good Deal — in this Market?!

Finding a Good Deal?Getting a good deal starts with being the only offer.

In today’s wild seller’s market, Silicon Valley’s hottest homes are sometimes seeing 18-20 offers, sometimes more. For homeowners, it has been a fantastic year to sell real estate. Even a distressed property or one with multiple issues, when marketed appropriately, can receive multiple offers and fetch a good price.

Good listing agents will do their best to create the right conditions to encourage as many offers as possible so that their seller can get the best price and terms for their home. This high-volume competition for homes, known as a bidding war, is great news for sellers and tough on buyers.

Needless to say, it’s not a great market for deal-seekers. Most buyers are loosing out on multiple homes before they are able to buy. Some feel hopeless watching the prices rise and choose to give up the search. Even buyers who are bidding at or over where a listing comps out often loose to higher offers with no contingencies!

No one wants to overpay for a home, but in this market it can sometimes feel like the only option.

So what’s a buyer to do? Here are my tips for home-seekers looking for a good deal in Silicon Valley’s hot housing market today.

Before you Buy

The first step is to understand that a good deal today is not the same thing as a good deal 5 years ago. It’s not even the same as last month or last week! Setting expectations based on the current market is key. Our monthly market reports are a useful tool to begin tracking these trends while you house hunt!

In the kind of raging hot seller’s market we’re seeing, yesterday’s news really is yesterday’s news. While the comps from last week’s sales might give an idea about market value, it isn’t today’s market value. Pent up demand and not enough inventory is having a strong impact on activity.

Think of it this way: if 15 people lost out on the last house that was available in a neighborhood, there’s a good chance many of them will be bidding on the next one and willing to offer more! This can be a hard pill to swallow. A good Realtor will help buyers understand the similar comparable sales, the trends, and the activity of a specific property to gauge where a home is likely to sell and how to make a successful offer.

The market is always fluctuating (watch the weekly updates on my Altos market report), but this year we’ve been seeing market activity like we haven’t seen since 2017 – it just keeps ramping up! Keep the trajectory of the market in mind and adjust your expectations to match it.

Finding A Good Deal Today

The #1 rule is that a good deal starts with being an only offer. Everything else comes from this rule!

The house that the bidders rejected.

Bargain buyers, avoid the hottest freshest listings! Instead, look at homes that have been on the market for longer than 14 days.

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What makes an offer lowball?

Lowball offer - baseball with the word LOWBALL imposed over it - what makes an offer lowball?Silicon 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 lowball?

What makes an offer lowball?

In general, contracts with prices more than 10% lower than list price will be considered low at best, and insulting at worst, but there are many nuances, and this may not always be the case.

  • What is typical for the area? If most properties are being sold at 10% lower than list price, then 11% or 12% won’t be viewed too dimly if the home has been on the market for a while.
  • How long has this piece of real estate been listed for sale? What might seem low in the first week might look OK after 3 weeks.

What’s the immediate market climate like there?

What makes an offer lowball is above all related to what is happening in that precise micro market. 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 plus or minus 1% of list price and you come in 5% under, the seller may feel that your offer was not in good faith, that the offer is insulting, or you are not a serious buyer who takes the opportunity to buy seriously.
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What is an exclusion in a real estate contract? What is an inclusion?

What is an exclusion in a real estate contract? What is an inclusion? Both of these refer to fixtures at the property which is for sale. If you want to sell your home, it’s very important to understand the “law of fixtures” as it relates to what you leave and what you take with you – unless the inclusion or exclusion is specified in the contract.

In brief, built in or affixed items become real property and transfer with the sale (or as Realtors say, “conveys”). If something is built in, like a light fixture, but the seller and buyer agree in the contract that the seller can remove it, then it becomes an exclusion, as it is excluded or omitted from the sale.

If something not built in is allowed to remain behind, such as a garden hose, pool table, or curtains, then it’s an inclusion, as it’s included even though it is not real property.

Curtain rods are built in, so they are fixtures and therefore real property. But the curtains that hang on them are not built in, so they are personal property.

 

2 minute video explanation

What is a fixture?

Generally speaking, a fixture is any item affixed or attached to the house, townhouse, condo or property which is installed with the intention that it be there permanently. The only exception is if something is bolted for earthquake safety.

Examples of fixtures (items which stay or are included):

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Buying a Home Warranty in Silicon Valley? What You Need to Know to Choose Well.

What is a home warranty - photo with very old furnaceAre you considering purchasing a home warranty for your Silicon Valley home? The home warranty gives the buyer and seller both “peace of mind” regarding any surprises after the close of escrow. It is a one year policy, so at the end of that year, the homeowner may want to renew it or purchase a new policy.

If you are not sure what a home warranty is, or how it differs from home insurance or title insurance, please read this article: Homeowner’s Insurance, Title Insurance and Home Warranties on this same site.

Not sure if you need a home warranty or not? If your property is close to new and the appliances are all under warranty, you may not want to spend a few hundred dollars for this coverage. For older homes that you plan to live in without renovating much right away, a home warranty is a really excellent protection. In between? Read the policies on the various providers websites. As with all types of insurance, there are limitations, exclusions, and possible add on items or riders.

How do you make the best selection for your needs?

Its a good idea to get some basic information on plan coverage generally. The California Home Service Contract Association (CHSCA) provides useful information on this subject. The link is     http://www.homeservicecontract.org/state-associations/california/    Request brochures (or read them online) from a few of the companies listed below. There will be some differences in coverage, cost, and co-payment.  This page lists members who sell home warranties in CA.

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