Does Moving Up Make Sense?

Has your family grown out of that 2 bedroom home? Are you considering a larger residence in a different area? Or perhaps you just need more room for the new family dog? Here is a great article from Realtor Magazine which discusses the questions to ask yourself if you are considering making the move into a larger home.

“These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.

1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains

2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving. 

3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district. 

4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.

5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.

6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.”

If you are considering a move, now is a great time to take advantage of the low inventory of homes. With so many buyers and so few homes on the market, selling now often means multiple offers with buyers paying top dollar for your home. Additionally, if you are thinking of buying now, interest rates are at all-time historical lows which means saving money on your monthly payments. If a move is in your future, give me a call today to discuss your options!
Nicole Culbertson – Realtor

Coldwell Banker

(408) 410-2060

nicole.culbertson@cbnorcal.com

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REOs vs. Short Sales: What You Need to Know Before You Buy

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It can be argued that the best deals in real estate are REOs and short sale properties, with many offers being made days or even hours of becoming available. Why are they so appealing? Quite simply; they are priced to sell. But it’s important to really understand these properties and what you’re getting into if this is the route you decide to take.

REOs REOs are properties that banks have foreclosed on after the homeowners have not been able to make payments. Banks are left with the burden of maintaining the properties and selling them in a down market. In areas where thousands of properties have foreclosed, the expense can be enormous. In order to unload the homes, banks often price them below market.

SHORT SALES – These are properties that a homeowner owes more than the value of the property and the lender has agreed to sell for less than the amount owed on the mortgage – forgiving the seller their remaining debt. If a bank believes it can avoid less of a loss, they will sell the property short rather than putting it into foreclosure. Buyers usually have the opportunity to purchase these at current market prices or a little below.

REOsand short sales can absolutely be some of the best deals out there, but they are more complicated to buy than traditional homes. If you’re thinking of looking in this market, here are some suggestions that might help your search:

  • Know where and how to look – REOs and short sales are usually listed on the Multiple Listing Service and can be found on the majority of websites that feature properties for sale, including CaliforniaMoves.com. Many lenders also have their foreclosed properties listed directly on their websites.
  • Hope for the best, prepare for the worst – In all likelihood, you will not be “wowed” when touring a foreclosed property. It’s often the case that in the months leading to foreclosure, homeowners disregard maintenance and let the condition of the home deteriorate. You might have a better chance of finding short sale properties in good condition because once the bank decides to sell it short, it’s listed on the MLS and buyers are able to tour it. Homeowners tend to move out more quickly, giving the home less time to deteriorate.
  • Be patient – Transactions usually take longer when working with banks. Normally, you may hear back on an offer from the seller the next day. But with banks, an offer may have to be passed around for several people to review and approve. Expect a few days, weeks or even months to hear back on whether your offer is accepted.
  • There are other fish in the sea – Don’t worry if you don’t get the first or second property you make an offer on. There will be others. Foreclosures can come and go quickly, especially those in good condition. Be ready to pounce, but don’t be too disappointed if you miss out.

A foreclosed property could be one of the best investments you make, but also the most complicated. If you take time to do the research, you will likely find yourself reaping the benefits of your investment for years to come. Please let me know if you have any questions while beginning your search.

Reality Check: Shortage of Homes for Sale in the Bay Area Creating a Great Opportunity for Sellers

This months Reality Check focuses on the shortage of homes for sale in the Bay Area. Inventory is down over 62% from last year meaning multiple offers everywhere. If you are thinking of selling now is a great time. Conversely, if you are thinking of buying it may be time to consider a purchase before interest rates increase along with home prices. (Click on the link below to view this report)

Reality Check: Shortage of Homes for Sale in the Bay Area Creating a Great Opportunity for Sellers

 

 

Market Update: Bay Area Real Estate is Heating Up

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What a difference a few weeks make in the Bay Area housing market! Our office is laden with tales of multiple offer situations and frustrated buyers struggling to find homes to purchase. To me this means only one thing, Bay Area residential real estate is once again hot and values are on the rise – a great time for you to get in the market as a buyer before there is even more competition and a perfect time for anyone contemplating selling to take advantage of low single family inventory.  Take a look at this weeks Market Watch, where Rick Turley, President of Coldwell Banker’s Northern California division discusses the current state of the local market and the disparity between the San Francisco Bay Area markets and many other parts of the country. I’ve included excerpts from his blog below.

LOL: We’re having a wild house party- but too many sellers missing out on all the fun!

By: Rick Turley

 It seems like every day I see national headlines decrying the “struggling” housing market and questioning when things will finally turn around. And then I get to work and read the reports from our Bay Area offices showing sales jumping and multiple offers for many if not most homes in a number of areas, and I wonder if we’re on the same planet.

The disconnect between the Bay Area housing market and what’s being reported on a national basis is getting stranger every day. In other parts of the country, agents and government officials are trying to figure out creative ways to rid their markets of a huge backlog of housing while buyers show little interest in jumping in to help. Then there’s the Bay Area, where the housing market is just the opposite.

Take, for example, a few of the reports this week from our managers and agents on the frontlines:

  • From our Southern Marin manager: “Multiple offers continue to be the name of the game, but the difference from the past markets is we are now seeing multiple offers in all price ranges, not just REOs and Short Sales.”
  •  One $1 million-plus Mill Valley home in Strawberry garnered 11 offers last week, and another priced at $1.35 million had six offers.  Both are rumored to be in contract for almost $300,000 over list price.
  • “Buyers are getting frustrated over not getting the property in multiple offer situations, even when going substantially over the list price.”
  • From our Los Altos manager: “We are selling more than we are listing in most price ranges.  We had a healthy increase in the high end this past week with a $12 million and $7 million sale, several sales above $3 million and a dozen over $2 million.”
  • “Inventories are at historic lows and the market continues to heat up!”
  • From our Walnut Creek manager: “We’re seeing multiple offers on most every listing that comes on the market.   A condo in Walnut Creek received seven all cash offers!”

The same stories are being echoed in all parts of the Bay, from San Francisco and the Peninsula to San Jose to the East Bay, and not just the more expensive markets. Buyers are pounding the pavement, cash in hand and looking for good properties to buy – now, if not sooner. “It’s nuts out there,” said our Cupertino manager. “A third of our sales resulting in multiple offers.”

Given the surging demand for housing you’d think sellers would be rushing to their local brokerage office to list their home, right? Guess again. The inventory of homes for sale is the lowest it has been in years, maybe even a decade, according to long-time industry observers. The result is that buyers are fighting it out for the few homes on the market listed by savvy sellers.

So what’s keeping the other sellers away when homes are going for great prices once again? Two things, both of which could come back to bite sellers who try to time the market:

  1. A misunderstanding of the state of the housing market.

Perhaps they are reading the national headlines and still believe the market is in the doldrums, prices are still going down, and they don’t want to sell at bargain-basement prices. If so, they’re missing an incredible opportunity. We’re having a honest-to-goodness house party with lots of anxious buyers. But somehow, sellers never got their Evite.

  1. They’re waiting for the Facebook IPO.

The thinking goes that once Facebook goes public, hundreds of employees will receive lucrative stock options which – eventually – they will be able to cash after the lockup period and then rush out to bid up prices for local homes.  Wow, talking about betting on the come.

I’m not questioning the “Facebook effect” on the Silicon Valley housing market. Far from it, I think it certainly will have some impact on pricing at some point in some communities in the heart of the valley. But this strikes me as something like trying to time the stock market. I don’t know about you, but I’ve never been able to get that right. And I don’t think many others have as well.

The fact is that the real estate market has always come down to two simple factors: the law of supply and demand, and consumer confidence. Right now, both of those are telling me it’s a sellers’ market in the Bay Area. Consumers are feeling pretty darn confident as the economy picks up steam and the stock market presses higher. And the scales of supply and demand are tipping heavily in favor of sellers.

Smart, strategic sellers get that, and they’re making their moves now – not six months or a year from now. They’re the ones receiving multiple offers over their asking price because there just isn’t a lot of competition for buyers’ attention. They’re out there now, well before everyone else joins the party, tipping the scales back in favor of buyers once again.

Below is a market-by-market report from our local offices:

Silicon Valley – “It’s nuts out there,” our Cupertino manager said. Both sales activity and inventory are increasing and a third of sales are resulting in multiple offers. Our Los Altos manager reports that the single-family home segment of the market continues to surge and he’s seeing multiple offers in double digits and overbids of 10-15% on well-priced homes in good school districts in Los Altos, Mountain View and Cupertino areas.  Some activity is driven from the “Facebook buzz” and some from the stock market uptick. Financing is still a problem for many and some buyers make cash offers to out compete the others and then try to get a loan during the escrow period.  Interesting times ahead as we have lost inventory in Santa Clara County each week this year beginning the second week of January. We are seeing an uptick in multiple offers at all levels of the market in the Los Gatos area. In San Jose, our Almaden office manager says overpriced listings are not selling.  However, you cannot underprice a home.  It will and does get bid up – typically much higher than if you came out asking that price.  Sellers who feel the market is healthier are confusing that it is time to raise prices.  That’s not working.  Overall inventory is lowest we’ve seen in a decade. Similarly, our San Jose Main manager says inventory continues to decline. Open houses are extremely active. Low interest rates and increased consumer confidence is driving the market. Multiple offers are common in all price ranges. Sales activity is also up in Willow Glen.

SF Peninsula — Our Burlingame manager says agents are “crazy busy” and honing their multiple offer skills as it seems that every home in every price point has multiple buyers making offers. We are back to the non-contingent 1-3% per offer over asking type of market, last seen in 2004-2006. One Burlingame listing had 7 offers. The winning offer was $200k over asking. One other listing had 9 offers, and $179k over asking only got a backup position.  The challenge now is taking the buyers who are rightfully afraid of overpaying for a property through the process enough times and suffering enough disappointment that they begin to understand what it will take to be successful in an offer. In Half Moon Bay, our local office is seeing a lot of buyers from the over the hill coming to the coast with serious interest due to the low inventory and multiple offers situations on the Peninsula. Our Menlo Park manager says she’s seeing some “pretty vicious competition” for prime housing there.  If buyers do not have 50% down, it is VERY difficult to buy a house.  The local market still needs a lot more inventory. Buyers want to buy now. Our Palo Alto manager says they’re still suffering from extremely low inventory – probably a seven year low.  There are approximately 20 listings for 425 agents in Palo Alto.  Quite a few off-market sales are occurring – adding to an inflamed market. There was some good action in the Woodside office, including a couple of big sales – $8 million and $13 million. In San Carlos almost all sales are multiple offers due to extremely low inventory.