A lot of my clientele are over 50 years old and many of them are moving to the Bay area to retire, enjoy the waterfront and a more laid-back, peaceful way of life. However, some homebuyers are still reluctant about purchasing a home later in life. Is it scary? Are there negative connotations? How easy is it to buy a home after 50? [Read more…]
I get this question all of the time because buyers think that if they have an all cash offer they can naturally offer less for the home. But is this a wise move?
It all comes down to the house you’re buying, the current market conditions, and the seller. Let’s go over some scenarios where it would be appropriate to offer less in a cash situation and other situations where you shouldn’t even consider offering a penny less than full asking price.
Consider the sellers net. This is the amount the seller is going to walk away from. This is also where your buyer’s agent and the listing agent need to come together to negotiate the best price. If the seller is already at their lowest possible price that they can go and walk away either breaking even or with barely any net profit, you probably will not get accepted on a lower-priced offer regardless of whether it’s cash or not. Sellers don’t want to bring money to the table; they want to walk away with a profit.
You also have to consider the market. In the Tri-Valley area, there are micro markets throughout Pleasanton, San Ramon, and Livermore. Within those cities, there are even smaller micro-markets where the real estate industry is doing very well and other areas where homes take longer to sell. It’s going to depend on the house that you are buying, the net profit, and what the market is doing in that particular community or neighborhood.
If the home is in a popular neighborhood where homes sell within a week or two, you probably can’t offer much less than the asking price if any discount at all. You may also need to increase your price in a hot market. You will have plenty of competition and if there are other cash buyers in your area, coming in with a lower price than your closest competition will get your offer thrown out.
Read More: What is the New SB800 Home Warranty?
Alternatively, if you are buying a home in the neighborhood or community where the properties don’t move as quickly, it will depend on how long the house is on the market and if it has been already reduced. You may have a little bit of negotiating power when it comes to cash in these types of markets. Again, talk to your buyer’s agent about the net profit for the seller and if they can even afford to go any lower.
Terms also matter. When presenting a cash offer the terms will also be either attractive or unattractive. If you’re offering a quick closing, no contingencies, a high earnest money deposit and you’re not lowballing the seller too much, your offer may be considered. Plus, if there are no other offers on the table, regardless of whether it’s cash or a finance offer, you might be more likely to get an accepted offer.
What about a short sale or foreclosure?
If you’re offering cash, this is very attractive to banks, which hold power to accept or decline the offer. Even though you offer less with cash doesn’t mean it will naturally be accepted. Banks will typically respond faster, however, if you’re offering cash. The lender or the bank will need to evaluate their net profit as well to see if they can walk away with as much as possible or as little loss as possible.
[Read More: Should You Always Pay Cash if You Can?]
It also will come down to the condition of the house. If the seller has chosen to list the house as-is, and it is in great need of repair or upkeep, it seems reasonable to offer a lower price if the market does not support its current asking price. This is where a qualified, knowledgeable and experienced real estate agent comes into play. Only professional real estate broker or agent will be able to tell you if the home is priced appropriately as is or if a low price offer would be an acceptable move.
So, you can see that there are a lot of different factors when it comes to offering a lower than the asking price if you have all-cash. Using a real estate agent to find you the best home and off of the best advice when it comes to negotiations and offer is really the key to getting the price you want on a home you love.
Baby Boomers are Buying in California’s Tri-Valley area more and more.
Good idea or scary move?
It all depends on where you are in life, financially and physically. Should you downsize or invest? Move out or move up? These can be a lot of scary questions as baby boomers hit their retirement age. You may have made a lot of money over the past 30 years but with the drop in home prices over the last 8 years you may have lost a lot of it too. So where does that leave real estate investments today?
Many baby boomers have actually been delaying retirement for the basic fact that selling and downsizing just isn’t an option. They may owe more than the home is worth and this keeps them hanging onto it until it bounces back. Well, it has. Maybe not with the vengeance some would like but stronger certainly than we have seen in the past 4 years. The number of existing homes sold is up about 8% nationwide according to the S&P and prices have reached over 12% higher than they were this time last year. So now baby boomers are toying with the idea of selling or renting out and downsizing. Which is the best option and which makes the most sense financially? – How to Choose the Right Lender
[Related Post: Do Tiny Homes Make Good Retirement options?]
Generally speaking, we know it’s better to own than rent but that’s usually if you are going to stay in your home more than 5 years. Is that something baby boomers want to consider at this time? It all comes down to ease of living which has many implications as far as maintenance, finances and responsibility. If age 65 is no longer the retirement age, keeping a home or investing in new real estate may be well within the realm of possibility for baby boomers. Buying a new home is sometimes a strain on the cash flow, not just in the down payment but in monthly taxes, insurance, fees and the mortgage payment. Even if buyers plan on paying cash, they must consider the inevitable costs associated with owning real estate. One smart plan may be to buy a good rental investment, live in it for a while, and then rent it out when you are ready to move on. The equity remains and collects while the retirees are off enjoying the freedom.
So what makes the most sense for you? It really comes down to all the many variables associated with your specific retirement plan. I would love to talk to you about the options that might work when it comes to real estate in San Ramon, Pleasanton, Danville or Dublin. Call me today and let’s talk.
In today’s real estate world more and more homebuyers are being informed and educating themselves on the process, the transaction and the details. This is great and it helps buyers understand and feel more comfortable with their purchase. Before looking and buying a home there are some things that you should do so that you are prepared, well-informed and assured you are ready to buy. Here are 10 things all potential homeowners should do before buying a house.
#1. Know your own finances.
Before applying for a home loan, looking at homes or touring open houses, understand your credit history, score and your own finances. You certainly don’t want to be surprised when a lender discovers that you have a low credit score and that loan you took out 10 years ago never got paid off. Make sure there are no surprises and if you find any errors on your credit history correct them or write a letter of explanation before applying for a home loan.
#2. Shop for the right lender.
There are lots of lenders out there and you should be shopping them just as much is you would shop for a house. The rates, points, fees and costs can all vary from lender to lender so let them know your shopping them so that you get the best deal.
#3. Understand homebuying expenses.
There are a lot of zero down home loans or low-cost home loans out there making it fairly easy for first-time homebuyers to purchase a property however, there are expenses that you need to know about such as out-of-pocket earnest money costs, appraisal fees and home inspection costs. It’s important to have several thousand dollars for these items but talk to your lender and your real estate agent about how much exactly you’ll need in order to buy a house.
#4. Get your own buyers agent.
Find a buyers agent that has this profession as a full-time business. It’s fairly easy to get your real estate license so many people real estate and have a full-time day job however, they may not understand the changes, rules and regulations of purchasing property so it’s best to go with an experienced and seasoned real estate agent so you have someone on your side throughout the process.
#5. Don’t max out your budget.
Just because you can’t afford a $500,000 house, doesn’t necessarily mean you need to max out that budget. Looking for a home around $450,000 will give you a little bit of breathing room and allow you to save money for those home repairs that will now need to deal with in the future.
#6. Don’t let your emotions rule you.
I’ve dealt with many people that fall in love with the house and want it at all costs even though after the home inspection the property is in dire need of repairs and could even be hazardous. Try not to let your emotions get the better of you and try not to completely fall in love with the house until you know it’s going to be yours.
#7. Ask about the homeowners association.
HOA, or homeowners associations are very common in the bay area and Tri-Valley area so you want to double check on how much you’ll be paying monthly for the homeowners association. Single-family homes, residential neighborhoods and condo associations can all have an HOA, so make sure you agree with it before signing on the dotted line.
#8. Consider plans for the future.
For first-time homebuyers it can be difficult to think long-term but the home you by now probably will not be your only home. Consider resale value, location, school districts, and what it would take to sell the property in the future if need be.
#9. Try to look past cosmetics.
Some of the best homes with the greatest deals out there may have peeling, outdated wallpaper, older appliances and wood paneling. But, you can get a great deal and if you look past the cosmetics and see the house for what it really is, you may be getting a diamond in the rough.
#10. Don’t sabotage your finances.
Once you’ve applied for a home loan do not make any large purchases or take out another loan. This can greatly affect your interest rate and even your ability to get the loan at all. Consider putting all of your finances on hold and freeze them until the transaction is complete.
For more information or to get started on any of these steps contact my office today.
Buying a house, they said. It will be so easy, they said. Until all of a sudden, you have these hidden costs and fees popping up all over the place. I don’t want you surprised at all with any of the costs or fees involved in buying or selling a house but you do need to know that buying a house does require some money.
There are many billboards, signs and advertisements out there touting the you can buy a house with zero down and no money. Do you really want to be a homeowner if you have no money in the bank? That’s a serious question that deserves some serious consideration.
Now, I’m not saying that you need hundreds of thousands of dollars or even tens of thousands of dollars in order to be a homeowner but there are certain costs and fees associated with buying a house that all homeowners, especially first-time homeowners can tend to be surprised about. I want you aware of everything and doing your homework, including reading this blog post, will put you in a better position financially.
Here are some hidden costs to buying a home.
Out-of-pocket home inspection costs.
This is one of the expenses that will not be included in your closing costs. Unless your real estate agent or financial lender has done some creative consolidating, chances are you’ll need to pay for your home inspection out-of-pocket. This means you’ll need to write a check or give a credit card to the home inspector while they are there before or right after the home inspection. Home inspections tend to run anywhere from $350-$800. On average is about $400. If you can’t afford a home inspection out-of-pocket, you probably should not be buying a house. The home inspection is a vital part of the home buying process and not understanding everything you can about the home from a professional’s point of view could lead to some costly mistakes in the future. Make sure you have this money set aside for the home inspection.
The appraisal fee.
When borrowing money your lender will want to make sure that the home you are purchasing is worth the amount you are borrowing, which is why they’ll need to order an appraisal that you’ll need to pay for. The lender will typically hire an independent certified appraiser to assess the property value of the home. It will document varies features that make the home valuable and they can typically run between $250 and $600. This upfront fee will be charged directly to the borrower by the lender and may or may not be included in the closing costs.
Some lenders will require that an escrow account be set up in conjunction with a mortgage loan agreement. This will house money to pay ongoing property related expenses on the homeowners behalf including homeowners insurance, private mortgage insurance and property taxes. There also may be an additional deposit required at closing for this account. Be sure to check with your lender or your real estate agent about these additional fees.
Potential survey costs.
Not all homes will require a survey but it may be required so everyone knows exactly where your property’s boundaries are. This could be several hundred dollars but again, not required however, you will be paid directly to the surveyor.
Earnest money deposit.
When you first make an offer on a home you’ll need to write a check or money order for an earnest money deposit. This holds the property as the first right of refusal to buy the home. This could be anywhere from 1% to 5% of the purchase price of the home so this is a good chunk of money that could be several thousand dollars. This will go toward your down payment at closing. This money will not be deposited until mutual agreement is secured on the purchase and sale contract.
When you finalize the sale on your new property closing costs will include a variety of courier fees, escrow and title company fees, appraisals, lending fees, points etc. and may or may not include some of the previous points as well. This could be anywhere from $5000-$20,000 based on the price of the home. This can be rolled into the cost of the home if the property can bear the value however, talk to your lender about this so that you’re not stuck with a $10,000 bill that you didn’t know about.
Buying a home should be fun but understanding all of the details about the transaction and the lending practices will help you be better prepared for the entire process. For more information or to get started or to answer any questions you might have about homebuying in the Tri-Valley area contact my office today.