How long does it take to buy a home in Silicon Valley?

How long does it take to buy a home - calendar with target, house, moving truck, keys, bubblyHow long does it take to buy a home in Silicon Valley?  There are really three questions within that one:

  • 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)
  • how many offers will you have to write
  • and finally, how much time is involved in getting the transaction closed

We are presuming that our readers know that a pre-approval, not a pre-qualification, is absolutely necessary. Being pre-underwritten is better still. The lender decision needs to be made early on, before house hunting.

The short answer: if you are pre-approved, have cash in the bank, are decisive, are on the same page (if buying with someone else), and committed, you could go from getting the pre-approval letter to owning a home in 6 weeks – if everything lines up perfectly. For most people, it’s 2- 4 months.

What could go wrong? What could slow things down? Please read on!

How long does it take to buy a home in Silicon Valley: first step, selecting a home to bid on

Often our clients need to see 10 homes, sometimes a little more, in person before they feel like they know the market and the choices well enough to select a home they want to write an offer on.  This is after a highly refined search, usually, with a lot of info provided upfront and online. Many properties are eliminated before we ever see them.

How long does it take? Depending on how broad of an area they’re considering, and how much of a hurry they’re in, this varies, but normally is 4 – 6 weeks for most of our home buyer clients. Some are faster, some slower.

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.

If clients look for 3 or 4 months and never even write an offer, they are either not serious, not realistic, or if there are two buyers, they aren’t in agreement with each other. We see this too often.
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What is a preliminary title report? Why does it matter?

What is a Preliminary Title Report?The preliminary title report is provided by the title insurance company not long after escrow is opened.  In Santa Clara County, unlike many parts of California, usually escrow is opened once a listing agreement is signed (not after a buyer is in contract to purchase the home).  That means that the preliminary title report (sometimes called the “pre” or “prelim”) is ready to be viewed by the time the home goes on the market or shortly thereafer.

What is in the preliminary title report?

  1. Information on where escrow is opened (which company) and who the escrow officer is along with their contact info
  2. The form of title insurance anticipated by the report (there may be options available)
  3. Title – who the owners are, if it’s in a trust, an LLC, etc.
  4. Legal description of the property  (assessor’s parcel number, address etc.). If it is is a property held in condo ownership, that will show as well.
  5. Info on any and all liens recorded against the property (mortgages, property taxes, supplemental taxes etc.)
  6. If there are any covenants, conditions and restrictions (CCRs)
  7. If there are any easements (usually there are at least public utility easements)
  8. A plat map of the property
  9. and a few more items….

Why does a prelim matter? (more…)

Meet the Team

Teamwork graphic representing the Mary Pope-Handy Team - cartoons of people in various roles around the spoke of a wheel with the word TEAM at the center of the wheelMeet the Team – Mary Pope-Handy and Clair Handy, a mother and daughter team with Christie’s International Real Estate Sereno.

I, Mary, have been selling homes full time for over three decades. Clair assisted me for years with various clerical and blog tasks, and later did more marketing, article writing, graphic design for some of the post artwork, social media sharing, and real estate errands generally.

In 2021, Clair received her California real estate license to take on a forward facing role in the team and became my junior partner.

We coordinate and do nearly everything together, whether it’s open houses, showings, or marketing efforts, but when there’s a time crunch and we need to be in two locations to accommodate our clients’ schedules, then we divide and conquer.

Learn about the folks supporting our team

Several people, companies, and systems assist us in our work with buyers and sellers in Silicon Valley. Most often, our clients will not see or speak with many of our team members much (if at all), but they are all part of the package, if on the “back end” much of the time. Without them, though, it would be impossible for us to assist our clients in getting their homes bought and sold.
Transaction Coordinator:

We employ a transaction coordinator, Joe Chames (and team) of Serulian Virtual Services, who makes sure that the paperwork is complete when preparing homes to sell or when navigating clients through the sale and escrow period. With a myriad of places to sign and initial and papers not to forget, it’s helpful to have a second set of eyes on the file.

Additionally, other agents also review the file on behalf of Sereno management. When there are legal questions, which can come up from time to time, we have a legal counsel available to make sure that we as agents are walking the straight and narrow. (This is not legal guidance for our clients.) We get answers back within a business day, if not a few hours.

Finally, there are several agents who assist us in some cases (vacation, sickness, family emergencies) as I am part of a Realtor “co op” group in which we support each other when a hand is needed. If you work with Mary and Clair, there are two backup people or groups to make sure you are able to see homes or have things taken care of in case of vacation, illness, or unexpected issue.

We are very well supported on the office or brokerage level. When you hire us, you get a full staff behind us, too.

Our outside specialists

(A) INSPECTORS

Whether buying or selling a silicon valley home or investment property, good inspections are critical. We don’t have one list for buyers and another for sellers – no matter which end of the transaction you’re on, you want excellent information. Surprises tend to sour escrows, so part of the plan in helping you avoid trouble is to avoid surprises. Only with excellent information can you make good decisions and have more control of the way your real estate sale progresses.

1. Home or Property Inspectors. It is crucial that your property inspector be exceedingly well trained, experienced, careful, clear, and through. In California, there is no license for home inspectors. However, there are a couple of trade groups which have a very high standard of practice. One is ASHI (American Society of Home Inspectors) and the other is CREIA (California Real Estate Inspection Association).

You can find a list of ASHI Inspectors in Santa Clara County at this link. On this list, I’ve had extremely positive experiences with Brett Reeder of Compass Home Inspections especially.

2. Logo for Thrasher Termite & Pest Control in Los GatosTermite and Pest Inspectors. In California, especially in our sub-tropical coastal area of Silicon Valley, termites are an ongoing issue. We have both subterranean and drywood termites and sometimes even dampwood termites – plus boring beetles, carpenter ants, and many other wood destroying organisims.

By far and away, the termite company I prefer to work with (and have work on my own home) is Thrasher Termite & Pest Control. They are located in Los Gatos but serve all of Santa Clara County (and I believe occasionally go into nearby counties – they once helped me with a listing in Scotts Valley, which is in Santa Cruz County).

Thrasher Termite & Pest Control has a great website, or you can reach them by phone at 408 354-9944. I’ve learned a lot from the folks at Thrasher and have shared some of what I’ve learned from them in this blog and others. See also my article on How often should you get a termite inspection?

On the rare occasion that Thrasher is not available, there are other termite companies that I may need to use. Or, if I’m working with a buyer and the seller has pre-sale inspections, there are pest control companies whose work I trust to be ethical and thorough. The Pest Control Operators of California can provide a complete list of who does termite and pest work in the San Jose area, but we maintain a list of probably 10 local providers that we trust.

The State of California has a site, The Structural Pest Control Board, which has great information for consumers and agents alike, including a license lookup feature.

There are more inspectors whom I endorse and work with, but these two categories are the main ones.

(B) TITLE & ESCROW

There are a number of excellent title companies in Santa Clara County. The one that we prefer to work with is Fidelity National Title in Saratoga with Colleen Stevens, our escrow officer, and Tania Cheater, our title rep, to help us.

They are all also financially sound, which is critically important in today’s real estate landscape in Santa Clara County.

(C) LENDERS

We have a short list of about 3-4 lenders I can refer to you. Some specialize in one type of loan or home situation, some another. Please contact me and I can give you a couple of names that are most likely to be a good fit for you.

If you have a particular bank that you want to work with, please don’t just call the toll free number on the website of that institution. Not every loan officer is as good as another. If we don’t have a name of someone for that lender, we will ask around and find you someone who’s got a known track record. This is imperative so that your escrow is one that’s as smooth and headache free as possible.

(D) And More….

Depending on your needs, we have assistance from movers to house cleaners to photographers and full-time stagers. The list is extensive, reflecting my many years in the business! (Licensed & full time since early 1993.) If we don’t have someone already on our vendors  list, we’ll do some research and find some resources for our clients.

 

How Long Does It Take to Sell a Home in Today’s Market?

House with words - How long does it take to sell a home in Silicon Valley today?How long does it take to sell a home in Silicon Valley right now? It depends on what segment of the real estate market the property is in, and what type it is. Most homes are selling in 3-4 weeks.

How long does it take to sell a home in Santa Clara County?

First, for the success stories, the properties that do sell, what’s the timeframe?

  • Houses which have closed escrow averaged 27 days in September 2022 so far
  • Also in September, the median days on market is 17 days
  • For condos and townhouses, the average days on market so far this month is 38
  • The median days on market for condominiums and townhomes is 27

Pending sales – how long were they on the market?

  • Pending houses right now average 33 days on market
  • Pending condominiums and townhomes average 28 days on the market

It’s interesting to see that the more recent sales were slower for the houses but faster for condos and townhomes as compared to the closed sales.

Active listings and length of time on the market

  • Houses for sale in Santa Clara County that are not under contract (and not listed as “Agent Only”) average 52 days on market
  • For townhomes and condos, it’s an average of 44 days on market

So it seems that for the homes which DO sell (and not all homes which are listed become sale pending), the average is in the 3-4 week range.  What that says, pretty clearly too, is that if your listing is well marketed but doesn’t sell in three to four weeks, you’ve got a problem.

Some types of properties will always take longer (think Santa Cruz Mountains, ultra luxury homes and others), but overall, your home should be seeing 3-5 showings per week and get at least one offer for approximately every 10 showings, which should happen within 3-4 weeks.

What if your home has been on the market for a month with no offers, or only low offers?

If your house or condo has been actively listed and marketed for more than 4 weeks and isn’t selling, it’s time to have a conversation with your agent. Every situation is different and I cannot advise anyone but my own clients about what needs to happen in your case.

I can tell you that if your home does not get an acceptable offer in 3-4 weeks, there’s a good chance that the number one obstacle is a price that’s too high for the current market. If that is the case, it’s time to make a serious change in the price – think hedge clipper, not nail clipper. Otherwise, if home values are dropping and your price does not get ahead of it, you will be chasing the market down. It is very expensive when that happens.

Beyond price and just getting or not getting offers, you will want to understand:

  • how many showings are there each week?
  • what is the feedback from the buyer’s agents? (what are the buyers saying?)
  • what homes ARE selling?
  • how long does it take to sell if it’s underpriced? (that’s a common strategy today)

Some flaws are fixable and some are not fixable. You cannot do anything about a less desirable location or a neighbor with too many vehicles or an eyesore of a front yard. But you do control the price.

Some real estate gurus like to say “there’s no problem that the right price can’t fix”. That’s true, but sometimes there are cheaper ways to solve whatever the problem is.

In some cases, home sellers are offering to pay points on the buyer’s loan to offset the rising interest rates. Frequently it’s a lot cheaper for the seller to buy down the loan rate than to take a price reduction of 3-5%.

Related reading to how long does it take to sell:

Why didn’t my San Jose home sell? (on this site)

Beware over improving your property when preparing to sell (on this site)

Selling your home in Silicon Valley – 9 FAQs (on popehandy.com)

 

What does it mean to be “out of contract” in a home sale?

Is your indecision putting you out of contract? Worried looking woman with laptop computer.Every region of the country has some unique real estate vocabulary and phrases.  Here, in Silicon Valley, when we say “you’re out of contract“, it’s another way of saying “you are not doing what you promised to do in the purchase agreement that you signed” (meaning the real estate contract).  In other words, there is a seller or buyer default happening.

“Out of contract” is not a legal term. I remember hearing a local real estate educator say “there’s no such thing”. It’s not an official status. But it is a way of describing behavior that’s not in alignment with the contract’s express promises.

Contractual “Save the Dates”

Both sellers and buyers make promises to do certain things and most of these promises are tied to time frames or dates.  Here are a few of these time-sensitive promises or contractual obligations:

  • sellers agree to leave the utilities on until close of escrow
  • sellers promise to maintain the home until close of escrow as it was on the day the property went into contract (so mow the lawn, water it etc.)
  • buyers assert that they will get their initial deposit to title within a set number of days (the California Association of Realtor’s form states 3 business days or provides a blank to fill in an alternate number – it’s often 1 business day here)
  • buyers promise to remove contingencies within the times they stipulated in the offer
  • sellers will move out in according to the date set out in the contract
  • indecision over material facts or between buyers may make it hard to decide whether or not to remove any contingencies
  • buyers agree to take possession (move in) per the time/day agreed to in the purchase agreement (not before)
  • sellers bind themselves to having repairs done in a certain manner (depends on contract and clauses, if promised)

At one time or another, I have seen all of these items not adhered to by the parties who were supposed to make good on their word, and stranger violations that I don’t want to write about here lest I give someone a bad idea. I have seen sellers not move out on time (in some cases, elderly sellers who grossly misjudged the effort required to vacate.)  The failure to do so causes stress and anxiety, and sometimes worse: fear and anger.

Out of Contract: Why the Delay?

Sometimes, when either party is consumed with worry, a kind of emotional paralysis can set in. Luckily that is rare, but I have seen it. Buying and selling a home is extremely stressful, and once in awhile it coincides with other things: the death of a family member, a diagnosis of cancer, a divorce, a relocation that one party doesn’t want. So many things can happen at the same time. You may have heard the saying that “a confused mind says no”. With real estate, the confused mind doesn’t write or accept an offer, or doesn’t move forward as planned.

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Who is present at the home inspections?

Photo of house and words "who is present at the home inspection"Who is present at home inspections for Silicon Valley real estate sales? The answer really depends on when the inspections are done and who is paying for them.

Timing of the home inspections

Pre-sale inspections:  In Silicon Valley, many home sellers get pre-sale inspections of the home (property), roof, chimney, and a pest inspection or termite inspection too as they tend to provide an excellent return on investment.  With the seller’s inspections, often the listing agent will be present for either all of the inspection, or, if the seller is there and prefers, only at the summary. Inspectors are not ordinarily left at the property alone in this area – though in some states that is the norm.

Sale pending:  When the home is in contract, both the buyer’s real estate agent and the buyer or buyers will be present for the inspections. The seller and listing agent ordinarily are not there, but may be.  Being present is a great way for the future owners to really learn about the property, so we Realtors strongly encourage them to attend if at all possible.

More than a written report

A lot of time, there are nuances to the home inspections which you will only get in person and not find on the written report. Some inspectors may volunteer info on how to maintain things in the future, such as tips on keeping rain gutters from rusting. If you don’t attend, you won’t get that education.

As much as possible, Realtors try to get all home inspections to happen at once (same day, same window of time) to minimize the buyer’s time away from work and inconvenience to the seller. In some cases, however, the roof or other inspection may not be able to be scheduled at the same time. Roof inspections normally are not tightly scheduled – the inspector comes during a window of time which is not precise. Since no interior access to the home is required, this is usually not a problem. Even so, it’s nice if the buyer and selling agent (buyer’s agent) can be there to hear the verbal information when the home’s seen.

(Side note: a few years back, I met some Realtors from Utah who said that their inspectors have lock box keys and that they inspect with buyers present but the real estate agents absent. “My broker discourages our being present at home inspections – too much liability”, one of them explained to me.) (more…)

What does a title company do?

What does a title company do? People helping buyers, sellers, real estate professionals with title and escrow work.What is the function of a title company or title insurance company in real estate purchases or refinances? In Silicon Valley, and the San Francisco Bay Area and northern California generally, title companies perform two specific services:

  • provide title insurance for real estate being bought or borrowed against
  • provide escrow services, acting as the neutral third party which takes in the deposit money and holds it during the escrow period, disbursing all funds when escrow closes and having someone go to the county recorder’s office to record the deeds to complete the sale

Title insurance companies research the title history, find out what recorded easements may exist,reveal any encumbrances (leins, clouds on title, etc.). An escrow officer from the title company is usually the professional with a notary’s license who will sign off home buyers and sellers on the final documents, too.

There are many other services that title companies provide. Many people wonder how to hold title, and while neither your Realtor nor your escrow officer can advise you on how to do so, the title companies all have a little 1 page handout explaining the major concepts for each option on how to hold title.

If you need to sign off on the final documents out of town or even out of the country, the escrow officer and her or his support staff will work with you to coordinate it. (It can be a little tricky if overseas and outside of the U.S.).

If you are selling your house or condo and discover that an old loan that you paid off is still showing up in the preliminary title report, the escrow officer at the title insurance company will work to get it resolved and removed.

The customer service department at title companies can research the chain of title, too. Sometimes it’s quite interesting as the chain brings you back to the time of patents and land grants, with hand written deeds in a style of cursive which is somewhat foreign to us today.

There are many other things that title companies do – big and small – and most of them are “behind the scenes” that few of us ever witness directly, but without which no one would be able to close out sales with the safety net of title insurance which we value so much.

Title insurance can be a confusing concept, but I wrote about it elsewhere on this site.

What Is Title Insurance and Who Pays For It?
What is a preliminary title report? Why does it matter?

 

 

 

What is earnest money?

Earnest Money logoEarnest money refers to a home buyer’s deposit on a home that he or she is in contract to purchase.  It’s often called an earnest money deposit, initial deposit, or good faith deposit in Silicon Valley.  The terms are all interchangeable.

How much is the earnest money?

In the San Jose & Los Gatos areas, and Santa Clara County generally, the earnest money is usually 3% of the purchase price of the home.  It is placed in an escrow account, which is usually at a title company (in northern California that’s how it is handled – in Southern California, often there is a separate escrow company).

Ordinarily, funds are due within 3 business days of acceptance of the contract, but that can be changed (it’s one of the few places where the CAR and PRDS contracts reference business days rather than calendar days). Some listing agents will counter back that funds need to be in title the next day after the offer is ratified. Some buyers may request more than 3 days if their funds are coming from abroad.  With competitive, multiple offer situations, buyers should anticipate needing to get the money to title fast and have it ready to go before the offer is presented so that they aren’t at a disadvantage.

Is a cashier’s check required for the good faith deposit?

The initial deposit does not have to be a cashier’s check, however, some listing agents and sellers may request that in a counter offer.  That’s most likely to happen in a very competitive multiple offer frenzy, and unlikely to happen if it’s just one or two bids.

Increasingly, the funds today are wired to title, but in some cases, buyers may instead write a check. For the earnest money deposit, it may be a personal check. (At the end of escrow, it must be either a cashier’s check or a wire to bring the balance of the down payment to title. Both of these are referred to as “good funds”.)  It is important for home buyers to draft the check  correctly (not made out to just “title company”, for instance), and to understand that this isn’t a check that just sits in a drawer.  The check for the initial deposit is cashed by the escrow company as soon as they get it.  Real estate brokerages tend to prefer that Realtors don’t touch the buyer’s funds, so many are encouraging that consumers wire in funds rather than hand a check to a real estate agent.

Phishing and wire fraud is a concern, so when sending funds in electronically it is extremely important to phone the title company and verify the specific instructions.

Does the earnest money count as part of the entire down payment?

Yes, if the buyer is putting 20% down on some real estate, the initial deposit is likely to be 3% and the balance of the down payment will be 17%.  The balance of funds will need to be in escrow a couple of days before closing.  Many lenders will not fund the loan on the property until and unless the buyer’s money is in escrow first.

Can the buyers get the initial deposit back if they change their minds about buying the home?

This is not a “one size fits all” question.  If the buyers have contingencies, it may be possible to back out of the transaction and have the full deposit returned.  If the buyer has written an offer with no contingencies, that may be an uphill battle, and time to consult with a real estate attorney, as Realtors are not qualified nor allowed to provide tax or legal advice.

 

Related Reading:
What is escrow? (on popehandy.com blog)
What do international home buyers need to know about financing a real estate purchase in the United States? (on Move2SiliconValley.com – relocation site)

 

 

 

Phishing Attacks Regarding Escrow Wiring Instructions

CautionThere’s a new danger in Silicon Valley home buying: phishing emails with bad instructions on where to wire in funds for escrow.  Home buyers now usually wire in their initial or good faith deposit and also normally wire in the balance of the downpayment a few days prior to the close of escrow.  Bringing in the funds by a cashier’s check is also an option.

Somehow, the bad guys have at times gotten ahold of sensitive information and have sent fraudulant wiring instructions to home buyers.  Similarly, wire fraud has been attempted and directed at real estate professionals.

Please be very careful with all email, but especially anything involving money.  Do not click on attachments if you are not positive who’s sent it to you.  Sometimes the sender’s email address looks almost right but a closer view will reveal it’s not – mouse over it and double check!   Before wiring funds to title, CALL the branch and ask the escrow officer or assistant for specific wire instructions.  Keep them, as you will need them again at the end of the transaction.

Exercize caution with your paperwork and shred sensitive items when you no longer need them.

When in doubt about the authenticity or safety of something, call the title company (the number on the preliminary title report, not a number in an email) and double check everything.  And remember, you can always get a cashier’s check from your banking institution and walk it in.

 

 

 

Qualify The Advice You’ll Accept When Buying or Selling a Home in Silicon Valley

Escrow StressBuying & selling a home is usually stressful for consumers, and some circumstances can heighten the anxiety further (being in multiple offers, buying a distressed home, or anything out of the ordinary).  Once you write an offer or receive one on your property, you may feel like a nervous wreck as you navigate the escrow period. In some cases, you may come down with a bad case of buyer’s remorse or seller’s remorse.

We’re In Escrow: Now What?

You will want insights and advice so that you’re sure that you are doing the right thing each step of the way.  Even if you have a great Realtor who thoroughly understands Silicon Valley real estate and is a fantastic communicator, perhaps you want some assurance from an outside source (who’s not being paid for closing the deal) that you really are making good choices in the home sale.

There are a bunch of bad ways to do this but also some good alternatives.

What not to do:

  1. Don’t call all of your local Realtor friends whom you didn’t hire and ask for their input.  First, it’s not fair to them as businesspeople that you want their professional input but not for compensation.  Second, they aren’t supposed to meddle and it puts them in an akward position of “implied agency” in which they take on some risk (being your expert upon whose advice they rely) without the benefit of ever getting paid.
  2. Beware the well-intentioned advice of non-professionals who may not be up to speed with the current market conditions, construction, your purchase agreement, etc.  Sometimes the “over the cubicle wall” advice can be very, very upsetting as these folks get a homebuyer or home seller freaked out – often over nothing or over a misunderstanding of the situation due to a lack of information.   Most often, this “advice” is from completely unqualified people and will compound problems rather than help to solve them.

How about some good alternatives?

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