Six Paths to Success for Buyers in Tight Markets

In low-inventory markets, some buyers are having a hard time finding a home to buy. There are steps you can take to improve your odds of finding a home at a time when interest rates are at record lows and affordability is high.

One approach is to broaden your search. You should be clear about what it is you want to buy. But, homebuying involves making compromises. Just make sure you don’t give in on the essentials. You need a home that will last you for the long term. Avoid listings with major defects that will be expensive or impossible to fix.

The sorts of features you should be willing to give up, if necessary, are house style, or a large yard, which can be a maintenance drain. If you’re having no luck buying in your first-choice neighborhood, check out the adjacent areas. These could be the next turn-around neighborhoods when the overall housing market improves.

You could also do an about-face and consider condos rather than single-family homes. This might have the advantage of shortening your commute to work.

Ask your agent to cull the inventory of expired, withdrawn, and canceled listings that didn’t sell in the last year or two. These may not have sold because they were priced too high. If the sellers are still interested in selling, and aren’t locked into a lease, you might be able to work out a mutually acceptable price.

Be open to making improvements rather than holding out for a home that’s in move-in condition. Major fixers will probably be snapped up by investors to rehab and resell at a profit. This is a competitive market and not one for novice homebuyers.

However, if a listing isn’t receiving attention because of its dated décor, this could work if you intend to live in the property and not try to flip it for a profit. Be sure to work with an agent who has experience with cosmetic renovations, or consult with a decorator.

You’d be surprised what updated plumbing and light fixtures, new paint, floor finishes, appliances and improving the outdoor living can do to turn a dowdy listing into a comfortable abode. Just make sure you don’t tackle too much. You don’t want to over-improve for the neighborhood, and structural issues are taboo.

Don’t exhaust yourself by bidding on a house you can’t get. A home was recently listed for $985,000. Seventeen buyers made offers. It sold for $1.2 million. Underpriced listings are often bid up in a low-inventory market. Wait to make an offer until you find a listing that’s priced within your affordability range.

Don’t be afraid of accepting a backup offer if your bid isn’t accepted. The transaction fallout rate is pretty high in this market. Keep looking for another listing while you’re waiting to see if the first deal goes through.

All-cash offers tend to win in multiple-offer competitions. To be competitive, try to put yourself in a position to pay all cash. If you have savings you can tap and you can secure a private temporary loan from parents or borrow from a 401(k), you might be able to make a cash offer.

If your parents are providing some of the financing, ask them to write a letter that you can provide to the sellers that confirms your source of funds. This should be accompanied with documentation of the parents’ funds. You can refinance into a conventional mortgage later.

THE CLOSING: If the market where you’re looking is too hot, you can take the watch-and-wait approach. The market is always changing. When inventories increase, there will be more opportunities for buyers.

Lack of Homes for Sale Boosts Sales Prices

Tight housing inventory hurts September home sales

A continued shortage of available homes for sale lowered California home sales in September, while the median price reached the highest level in more than four years, C.A.R. reported this week.  Sales in September were down 5.2 percent compared with August and down 1.2 percent compared with September 2011.  The statewide median price of an existing single-family detached home inched up 0.3 percent from August’s $343,820 median price to $345,000 in September.  The September figure was up 19.5 from a revised $288,700 recorded in September 2011, marking the seventh consecutive month of both month-to-month and year-to-year price
increases.  September’s median price was the highest since August 2008, when the median price was $352,730.  The year-to-year increase was the largest since May 2010.
“For the state, at 3.7 months of supply, unsold inventory is still less than half what it would be in a normal market,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “As a result of the constrained supply at the moderate and lower end of the market, sales of homes priced under $200,000 dropped nearly 28 percent, and homes priced $200,000-$300,000 fell more than 15 percent in September.  By contrast, in the upper price range, where inventory isn’t as much of an issue, sales of homes priced $400,000-$500,000 rose more than 14 percent, and those priced above $500,000 increased more than 15 percent.”

Probate Sales in California

The probate process is a court-approved process that is designed to sort out the transfer of a person’s property at death.  I have been involved with several sales of properties in probate, as the listing agent or the selling agent or both.  Probate sales are different from regular sales in that once an offer has been accepted by the administrator or executor of the estate, the sale has to be approved by the court, unless full authority to administer the estate has been granted unter the Independent Administration of Estates Act (IAEA).  It has been my experience that IAEA probate properties are easier and faster to market, as some buyers and agents are intimidated by the court-approved sales process, often because they do not want to fall in love with a home, just to be out-bid in court and also because they have not really bought the property until it is approved by the court.

Some tips for selling probate properties:  There may be a lot of personal property that was left by the decedent and the problem of removing furniture, etc., can be burdensome.  The last listing I sold was filled with old computers, old furniture and old CDs and DVDs.  The heirs should carefully go through the property and set aside items that are precious, such as family photos and other memorabilia.  There are companies that can remove the other unwanted items.  A property in probate is listed just like any other with the asking price based on recent sales in the neighborhood.  Where court approval is required, the price may be more attractive because the process is more lengthy and complicated cialis vente internet.  Once an offer is accepted by the personal representative, the attorney for the estate will set a court date, which is probably at least a month out.  During this waiting time, notices about the court date are placed in the local newspapers to attract additional offerers.  There is a statutory formula for the first overbid.  It is an additional amount equal to 10% or more of the first $10,000 and 5% on the amount of the original bid in excess of $10,000.  If the court receives an acceptable overbid, the court will ask for additional overbids.  The judge will usually establish minimum increments as to the additional overbids.  All overbids will be taken into account based on the gross amount of the bid. .  If you are a prospective bidder on a probate listing, it might be advisable to set a limit on the amount you will pay, in case the price is bid up beyond the value of the property.  This is a simplification of the process, and only an attorney can give proper advice.

Home Warranty Policies for the Seller

When you put your home on the market, I recommend ordering home warranty coverage for the listing time and the escrow period.  It seems to never fail that when you care the most about whether all of your appliances, etc., are in working order, there will inevitably be something that fails.  One listing that I had quite awhile ago, had what was then a very expensive instant hot water heater ($950).  The owner accepted an offer and wouldn’t you know it, the water heater ceased to operate.  The agent representing the buyer told the seller, “If your agent had ordered seller’s coverage, you would not have to pay for installing a new water heater.”  Because my clients are dear to me and I want to be their “Realtor for life”, I paid to have a new water heater installed.  I haven’t forgotten that experience, as I felt that I had not given the seller the best possible service.  Now I try to always inform clients that there is such a policy and that on average for less than a dollar a day their home’s systems and appliances can be covered and their only responsibility would be to pay the service charge of about $55, regardless of the cost to repair.  In future posts, I will speak more about the value of home warranties for landlords and buyers.

Wait! Don’t Do That to Your Home!

Everyone should be able to make their homes an environment they will enjoy; it is one of the best things about homeownership.  Be careful, though.  When I purchase a home, remodel a home, or re-decorate a home, I always think, “Would a buyer like this?”  Here are a few of the things you probably should NOT do.   1.  Don’t convert your garage into living space; most home buyers like the ability to park their cars in a garage, even if they often do not.  If you go ahead, though, make sure it can easily be converted back.  2.  If you have a one-level home and need to add more space, try keeping it a one level instead of adding a second story.  The reason for this advice is that one-level homes appeal to a larger number of buyers, especially to senior citizens and young families.  3.  Resist the temptation of adding anything that takes up yard space; many people dream of a large, flat back yard.  4.  If you have a view, do not obstruct it with landscaping.  5.  Never create a floorplan that requires going through one bedroom to go into another bedroom.  6.  Resist using the latest styles of carpets, tiles and appliances, as chances are they will “date” your home when you go to sell it.  7.  Don’t plant too many shrubs and trees at the front of the house.  8.  Don’t panel your family room.  9.  Don’t put an ugly mailbox in front of your house; it is often the first thing someone will notice.  10.  If you have open beam ceilings, do not paint the beams a dark brown.  11.  Don’t texture the plaster of ceilings or walls.  12.  If at all possible, avoid decorating with wallpaper.  12.  Don’t put your laundry area in the kitchen; if it’s already there (as in many older homes), try to move it to the garage or some other part of the house.  13.  Don’t add on a pre-fabricated covered patio.  14.  Never, never have a chain-link fence.  15.  Never go ahead with an addition or improvement without checking with the city in which you reside and any kind of architectural review authority that you may have to assure that everything you are doing is up to code. 

I am sure I haven’t covered everything, so I will be sure to update this in future posts.