How to get your offer accepted in a crowded market

Our friends at JVM Lending shared a Redfin link recently that had a ton of great information on how to get an offer accepted. I currently have two homes on the market and the amount of offers on each are on opposite ends of the spectrum; I have one with 21 offers, and the other with 6. It’s funny to see that disparity between the two, and strategies to get an offer accepted and/or a house sold, can vary greatly because of it.

Here are some pro tips from the Redfin piece:

Nearly 1 in 4 (23.6%) homes that sold in 2017 went for over asking price, up from 21.8% in 2016. This means that buying a home has become more difficult and expensive in a hot, crowded market. You can’t simply offer the highest price and expect to be selected by the seller. Instead, try other strategies like offering all cash, waiving the inspection, or writing a personal cover letter to the homeowner. Above all, make sure you talk to your agent to create the right combination of strategies for the home you’re bidding on, or for the seller you’re trying to woo.

Here is some information from the Redfin article that breaks down data on thousands of offers written over the last two years, to see how effective these other strategies can be in improving a buyer’s chance at winning a bidding war:

Rank Strategy Improves a Competitive Offer’s Likelihood of Success by… Improves a Competitive Offer’s Likelihood of Success in the Luxury Market (Top 10% by List Price) by…
#1 All-Cash Offer 97% 438%
#2 Waived Financing Contingency 58% 76%
#3 Personal Cover Letter 52% No Significant Gain
#5 Pre-Inspection No Significant Gain No Significant Gain
#6 Waived Inspection Contingency No Significant Gain No Significant Gain

Cash is king, as you can see above. That’s because it allows for smooth, fast transactions without the hassle of loans or appraisals. If you don’t have the means to make an all-cash offer, you can always waive your financial contingency, which means you won’t have to wait for a loan approval. That will still increase your odds by 58%, according to Redfin! However, I find that the cash offers – especially if they are investors – will not be the highest price. On the home that had 21 offers, the key to the winning bid was who removed a portion of their appraisal contingency as the offer was so high we all knew it wouldn’t appraise, but that means the buyer has to have extra cash. That can be tough when it is an entry-level condo.

All this said, sometimes it just takes a personal touch to win over a seller. Writing a letter to the seller can be effective and increase your odds in a bidding war. Fortunately for most buyers, cash is not the only way into a seller’s heart.  Often these letters can forge a powerful connection between the buyer and seller, highlighting shared hobbies or interests, earning a seller’s compassion or trust, or ensuring that the home will be loved and cared for in the years to come.

So, whether you are offering all cash, waiving contingencies, writing a personal letter, or trying any number of other strategies to win the bidding war on the house of your dreams – especially in a saturated market like the Bay Area – always remember to consult your realtor first. He or she will have great insight into the market and what extra touches it might take to get the home, but at the end of the day the buyer has to be comfortble with the offer they are making!

Why rates went down after 4th Fed increase?

My friend Jay Vorhees at JVM Lending wrote another interesting end-of-year blog recently, regarding rates. Despite the Fed increasing rates for the 4th time in 2017, they are still down. Why is that, and how does it affect you?

In Jay’s blog, he notes that 30-year fixed rates have fallen 1/4 percent over the last year even though the Fed has done four increases. On that note, he asks why the Fed’s rate increases don’t push up mortgage rates?

In response, Jay gives two main reasons:

  1. Short-term rates don’t always affect long-term rates
  2. Many factors (besides the Fed) influence rates

Inflation, geopolitical strife, economic news and demand for credit and bank loans are the other main factors named by Jay. Most of those are very relevant in today’s societal and political climate. Basically, the Fed helps influence rates, but isn’t the sole influencer – if investors are pushed out of stocks or bonds into the other, due to war, a poor week on the stock market, etc., rates will change just as rapidly.

So, what does this mean for you?   Rates are going to continue to fluctuate. They are still low, so if you are considering buying, it might be a good time to get off the fence and make a move in 2018!

Rent vs. Buy Calculators

When discussing renting versus buying, it’s helpful to have tools to calculate the differences. Luckily, our friends at JVM Lending have hooked us up. Here is our edited version of their information:

Imagine having a borrower who is paying $1,800 in rent who is very nervous about his or her potential payment increase after purchasing a home. These calculators can show how their “effective payment” will go down when tax savings and appreciation are accounted for.

Now, Trulia and Freddie Mac both offer great “rent vs. buy” calculators that will help with this. Even with modest appreciation (like 3%) and tax rate (28-34%) assumptions, these calculators can clearly show how much better off people are when they buy.

For example, according to our imaginary borrower, the Trulia calculator tells us her net housing costs will actually be 3% lower after she buys a $500,000 home with 20% down. These tools can help potential  buyers get off the fence by showing why it’s a better investment to buy a home and  accurately differentiate between buying and renting.  I like to look at as you are paying yourself, not a landlord.

 

Warning, don’t leave valuables in your car!

Walnut Creek has always been a pleasant, mostly crime-free little town. As the population (and popularity) of it grows though, we’ve seen more and more brazen crimes.

FullSizeRender (22)

For whatever reason, car burglary seems to be the crime that is really rising fast in Walnut Creek. Unfortunately, I was recently a victim of such an attack. That’s my car in the picture above, shown in the first space next to the elevator on Locust in the garage at the movie theater downtown.

I believe whoever broke the window saw my small purple duffel bag that is a tool kit I received as a Christmas gift this year.   Another car three stalls down also had their window broke and a back pack stolen out of the car.  My son and I went to dinner and then the 10:15 showing of LaLaLand which got out at 12:30.  There were very few cars and people at that time of night and the police department said their are no cameras in the garage.  I think we were watched, cars scoped out and they waited for a quite time to break the window and steal a specific item.

Based on this experience and the cost to fix everything as it doesn’t exceed my deductible is to not leave anything that looks like a purse or a bag in the car and maybe leave it unlocked or if it can be mistaken for a purse, make sure it isn’t in site.

December/January housing market is stronger than you think

December and January are usually busy months with holidays, vacations and school breaks. But, contrary to popular belief, that does not mean the housing market slows down. On the contrary, actually!

for-sale-1

Based on 2015 numbers, listing your home in December and January actually give you a benefit. You can garner multiple offers and close above list price. In Spring, you get the price increase but also more houses listed, which lead to many more choices for buyers, making multiple offers rarer (or, you’ll get fewer offers at least, like 3 vs. 8 in Dec./Jan.).

If you’d like to take advantage of this market in December and January, reach out to me. I’d love to help you navigate the holiday season weather you are selling or buying a home or just consult with you on the best overall strategy for you!