What has waiting cost you?

Row of houses with arrow indication price appreciation - What has waiting cost you? Indecision can be expensive If you’ve been on the fence about buying a home, have you considered what has waiting cost you? Indecision can be financially and emotionally crippling. 

Both home buyers and home sellers can experience delays in buying and selling, and also experience losses in what they could accomplish in a real estate transaction because of slowdowns in execution. Since our Silicon Valley real estate market has more periods of home prices rising than prices falling, the majority of damage from delays appear to fall on home buyers.

Sellers may be locked in with low rates and may now be upset that they did make their move up or move down purchase when mortgage rates were better. Buyers may feel like their opportunity window has passed them by.

  • If you’ve been thinking of buying a home for 5 years or more, that wait has cost you lower home prices. There is a chance that you may be priced out of the market.
  • For those who bought a home before rates bottomed out during the worst of the COVID pandemic (rock bottom was January 2021), there was a chance of refinancing and getting a loan at under 3%.  Today rates are closer to 7%. Buyers now are watching rates for a chance to refinance and get a better deal and lower house payment. Rates are hugely important when gauging housing affordability.
  • A fair chunk of buyers are hoping that prices will decline.  Demand far outstrips supply, though, so for now that appears to be wishful thinking.
  • There are some times when home prices go up faster than you can save. Right now appears to be one of those periods. If you decide to “wait and save”, the gap will increase between you and the home you want to buy, sadly.

Home buyers, what has waiting cost you?

Since 2012 our housing market has experienced prolonged periods of rising home prices with only a few corrections here and there. For would be owners, those few corrections were opportunity moments. Our last one was the second half of 2022. When home values are soft, few buyers jump in, though, waiting to get more for their money by holding off.

Trying to time the market seldom works, though. Blink and the market shifts back into the other direction! There’s almost never a perfect time and some objection to buying.

As am example, here are the average and median sale prices for Cambrian Park (MLS area 14), a section of San Jose that is often fairly reflective of the county’s appreciation overall.

The first year is 2013 since from 2006 – 2012 we had a bit of a wild ride with the Great Recession, but by January 2013 we were solidly into an appreciating market.

Cambrian home prices over time - what has waiting cost you?

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What happens after a purchase offer is submitted?

what is happeningIn the San Jose area, probably 90% or more of real estate purchase contracts are emailed to the listing agent by the buyer’s agent.  In the old days, the standard of practice was to have a live presentation by the buyer’s agent to both the listing and agent and the seller(s). Can the buyer’s agent present the real estate purchase contract directly to the seller and listing agent in Silicon Valley? Yes – it’s just not so common anymore.

Either way, what happens after the contract has been delivered or presented?  If it’s a live presentation, the buyer’s agent will be asked to either leave and be called later (or emailed) or requested to take a seat in the lobby (or in his or her car, if at the seller’s home) and wait while a private discussion happens between seller(s) and listing agent.  From there, it could be some questions to clarify why things are a certain way (such as a low initial deposit, a long escrow or long contingency time frames).   Questions aside, the response could be quick if it’s a super clean offer and the only one presented (or in the wings).  Conversely, it may be several hours, or possibly longer, before hearing back with an acceptance, rejection, or counter offer.

It’s similar with an email presentation.  You might get questions or clarification requests right away (ideally one call with all questions, rather than a stream of them over several hours) coming from the agent and/or seller through the agent.  Or you may not get much other than an acknowledgement that the paperwork was received.  You may find yourself waiting and waiting….

What’s happening behind the scenes if the response is not forthcoming in a short period of time? (more…)

Why Do Agents Suggest That Sellers Price Their Home “At The Market”?

A very common seller concern, understandably, is selling the home for too little money.  Oftentimes they want to price their Silicon Valley home so that they “have room to negotiate” and “don’t leave too much money on the table”.

The trick is in figuring out how much room you really need to negotiate and at what point you’re dramatically hurting your chances of selling by overpricing. Where’s the tipping point?

Why do home sellers sometimes overprice their homes?Let’s do some mythical math – let’s say a 4 bed, 2 bath home in Los Gatos or Almaden Valley is worth approximately $1,000,000 (depending on terms like “As Is”, the loan type or all cash, free rent back, etc., the probable sales price range might go from about $975,000 to $1,025,000).

If the home’s likely value on the market is worth about one million, many agents will suggest listing the home at about $999,000 in order to get buyers who may not search over the $1 million mark and to drum up interest, traffic, and hopefully at least one offer.

Saavy and experienced agents know that most homes sell fairly close to list price in today’s market (Almaden Valley houses are selling, on average, at 99% of list price and Los Gatos homes are selling at an average of 97% of list price), so most would not want to go beyond that percentage – whatever it is – since we also know that most homes are not selling.  Five percent over probable list price is ususually the upper limits of what may be wise positioning.   In the case of our mythical million dollar home, the highest that some agents would see as potentially viable might be $1,050,000 – but many others would not venture that high, feeling it creates a big risk of the home sitting on the market too long and ultimately selling for much less if the home is perceived as shopworn. They might place the upper limit at $1,025,000 or close to there.

Sellers, though, sometimes see the numbers but want to list their home higher – perhaps 10% higher or more over probable market value.  Why is this so often the case?

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