Should You Move Out Before You Sell?

Should You Move Out or Vacate Before You Sell?A decade ago, it was the norm for Silicon Valley homeowners to occupy the home they were selling – today a majority of homes are being sold unoccupied or vacant. Why is that? And should you move out before you sell?

A few years ago, around the mid- to late-2010s, we began to see an increasing number of vacant and professionally staged properties for sale. Last year, most sellers simply felt safer moving out before selling due to the pandemic. Today that continues to be the case.

Over time, the reasons for homeowners to move out before marketing a primary residence have increased. While sellers can certainly still occupy a home on the market and sell it successfully, it’s not our recommendation for most people and here’s why.

Seller Stress

First things first, if you are able to move out before you sell it can reduce a lot of stress. And this has almost always been the case.

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Hot seller’s market – what is it?

Hot Seller's Market!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)
  • sale price to list price ratio
  • 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.

Related reading:

A summary of tips for multiple-offer situations in Silicon Valley real estate contracts

Should you write an offer with no contingencies? What is the risk with a non-contingent offer?

Mistakes that buyers’ agents make which damage their clients’ chances of winning in multiple offers

 

 

 

The three greatest temptations for sellers in a raging hot market

House for saleIn a raging hot seller’s market such as we are experiencing today in Silicon Valley, home owners may be subject to some very costly temptations.

Home seller temptation # 1: overconfidence on the market

Because folks read about the dozens of offers on some homes, by extension, it’s easy to believe that every home sells, for top dollar, with no effort or planning on the part of the seller. This is a huge mistake. Perhaps we should even call it a myth since it may be commonly believed.

In today’s wildly hot market, there are still some homes that DO NOT SELL. 

What are the odds that your home won’t sell?

I just pulled some numbers from the MLS today, July 23, 2018. You may find them surprising!

  • In Santa Clara County, there are currently 1274 single family homes on the market
    • 490 of them have been on the market at least 30 days – 38% are not moving quickly & likely need a price reduction, if it hasn’t already been done
    • 211 of the 1274 have been for sale for at least 60 days – 17% have had 2 months worth of open houses, keeping the home spotless, etc.
    • 107 of the 1274 have a “days on market” of 90 days or more – 8% have serious market rejection
  • These are not all luxury homes!
    • 9 are listed at under $1 million
    •  13 are offered between $1 million and $1,499,999 (“normal” houses in our area)
    •  9 are on the market between $1.5 mil and $1,999,999
    • 14 are listed at $2 million to $2,499,999 (these are still not luxury homes in most cases)
    • 11 are priced between $2.5 mil and $2,999,999
    • That’s 56 homes of 107 that are under $3 million. The balance are “high end homes”, which usually are more challenging to sell

The best homes, those which are well priced, well marketed, and are easily shown, sell within 2-3 weeks. After that, home buyers view them as stale listings and assume something terrible is wrong with them. After three weeks, unless the home gets a deep price reduction, it’s unlikely to get multiple offers.

This first temptation is the greatest one, and it often leads to mistakes in areas #2 and #3, listed below. (more…)

Taking your time buying a home? It’s probably costing you.

Many of my clients here in Silicon Valley are highly analytical and risk averse, so want to proceed cautiously, and slowly, with home buying.  Unfortunately, when it’s a hot seller’s market, as it is today in and near San Jose, a long delay in buying can mean higher costs, or worse, getting entirely priced out of the market.

I know first-hand, because I did this myself in the late 80s when purchasing my first home.  The situation was similar.  It was a crazy red hot seller’s market.  Every turnkey home (there weren’t many on the market at all) got multiple offers and massive overbids.  Competitors with the largest down payment and the easiest terms for sellers beat my husband and me out over and over.  We set about to “power save” and boost our downpayment to be more competitive.  But prices rose faster than we could save.  Finally, we broke down and accepted help from my parents in the form of a loan, and we settled on a house that wasn’t really turnkey (and not nearly as nice as what we could have bought 2 years prior).  Looking back now, I believe the amount lost due to our delay in acting decisively was probably equal to between 10 and 20% of our purchase price.  Homes had risen in value that much! And it is happening again.

If you wish to purchase a home in Los Gatos, or anywhere in Santa Clara County, it’s very expensive to take your time.  For instance, most properties in here are selling for about 20% more today than a year ago.  Again, that’s the down payment!  Add to that the rising interest rates and you are getting squeezed on both ends.

 

 

 

What is a pre-emptive offer?

return of the real estate bidding warsSilicon Valley real estate’s market madness is back -in case you weren’t looking, this is what we are seeing in places like Cupertino, Palo Alto, Los Altos, and Saratoga – or anywhere in which there are great schools (especially with a shorter commute) or some other reason why a neighborhood is very highly desirable:

If this all sounds vaguely familiar to you, then you were here in the South Bay or San Francisco Peninsula and involved in real estate in 2000 (and to a lesser extent in 2005).  Whether you’re a Realtor, lender, or consumer trying to sell or buy a house or townhouse/condo in a great area, you knew it was happening.

One of the elements for this madness is the pre-emptive offer.  What is it?

What is a pre-emptive offer?When the real estate market in Santa Clara & San Mateo Counties runs red hot – in the seller’s favor – often the listing agents will direct that there is an offer date or deadline. Most of the time it’s about a week after the property is listed for sale on the MLS.  The reason for the wait time, of course, is to provide enough exposure so that all interested parties have a chance to tour the home, review pre-sale inspections and to write up a purchase contract for it.  Otherwise, you have a foot race and only the swift have a chance. The lack of multiples will limit the sales price, so savvy Silicon Valley home sellers will usually set an offer date if multiples appear to be likely.

A pre-emptive offer is one in which the home buyer doesn’t wait for the offer deadline, but submits a purchase agreement ahead of time. Sometimes it’s even “sight unseen”! Obviously the latter will be considered shaky since the buyer could easily get a bad case of buyer’s remorse.

Smart listing agents will warn their home sellers about the temptation to accept a pre-emptive offer.  That Siren Song can be tempting!  But those would-be home buyers are unlikely to disappear if made to wait a week, so in many cases, it’s best to stick to the plan.