If you read the newspapers about the Silicon Valley real estate market, you may be confused and frustrated. One article states that the market is cooling, and another points to multiple offers, overbids, and strong appreciation year over year. Which is it?
The Silicon Valley and Santa Clara County real estate market is a mixed bag right now. Some areas, and some price points, are super “hot” despite the overall slight slowing. (Last month San Mateo County and Santa Cruz County seemed to be cooler than Santa Clara County.) But in every market and pricing tier, there may be hot pockets due to schools, commute location, attractive pricing, etc. Or in some cases, there may be special properties where the seller has done an extraordinary job (and perhaps the listing agent has done an equally good one) and the buying public’s response is stronger than we might otherwise have expected.
As a home buyer, you’ll want to get information relative to the type of property you are trying to purchase and it needs to be drilled down to the hyper local market. Sometimes even within a zip code, radius of a home, school district, and other criteria, it becomes evident that a particular subdivision may simply command a higher price or sell faster and for a higher sale price to list price ratio than others nearby. Enlist your Realtor’s help and study the comps, looking for patterns.
As a home seller, it’s crucial to know what is happening both in your own subdivision and in the area closest to your home (within a mile or so). Ask your listing agent to get you the comps. See if he or she can network with other real estate licensees to find out the pending sale price of homes near you that have gone under contract, and how many offers there were. On pricing, it may be tempting to list your home close to the last sale price in the neighborhood, but often a better strategy is simply to list it a little more (in a rising market) than that property’s list price instead. This is on a case by case basis, so talk with your realty professional about the strategy.
Can you predict the outcome? Not so much. It’s not always possible to know ahead of time how many real estate purchase offers may be presented on a home for sale. Sometimes it looks like 3 or 4 and in the last hours before the deadline the number of bidders can more than double. Or, conversely, everyone can get cold feet.
What I do see, very clearly, is that the properties which are in better shape (both cosmetic and structural) have a higher percentage of buyers who write contracts to those who’ve downloaded disclosures than we find when a house or condo is a “fixer”. A home that makes buyers feel safe (no surprises coming, major expenses taken care of) will usually increase the demand for that home if everything else is done well too.
For example, if a house has most of the big ticket items done and is pretty much move in ready, perhaps the ratio of offers to disclosures pulled might be 80%. In a home with a mixture of improvements made and those needed the ratio might be 50% (a “typical home”). And if a house looks like it needs $200,000 worth of work, the figure might be just 30% who write an offer after reviewing disclosures.
Each property has to be assessed on its own merits. If right now most houses in Cambrian are getting 3-4 offers, don’t assume that any particular house will get the same. If a home needs a lot of work and is not priced low enough to overcome that condition, it may get few or no offers. If it’s well staged, well priced, turnkey and worry-free, it may get 10 offers.
Check out current activity in the Santa Clara County market in the map below: