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Tips For Selling Your Home

Tips For Selling Your Home

Are you thinking of selling your property and looking for tips for selling your home? You’ve come to the right place, my friend.

I’m going to take you through the home selling process step-by-step and provide as many tips for selling your home as I can. By the time we’re done, you’re going to have a checklist that will save you time, money, and stress.

My goal?

To provide you with nothing but value, so that you’ll give yourself the best chance to do the following:

  1. Spend the least amount to maximize your returns
  2. Sell for the highest price in the shortest amount of time
  3. Reduce stress during your home sale

Ready?

One of the biggest financial transactions of your life, the home selling process is important and has eight critical steps.

You’ll walk away with home selling tips for each of these and the eight steps to selling your home consist of the following:

home selling process

Tips For Selling Your Home #1: How to Find a Good Realtor to Sell my House

I know, I know…

You’d rather avoid this until the last minute, right? I don’t blame you. However, choosing the right agent before you start getting the home ready can save you time and money.

How?

An experienced and savvy agent can provide you with valuable tips for selling your home. Many home sellers will start getting their home ready before partnering with a Realtor®. Sometimes this works, but many times it causes more stress, time, and money. We see many homeowners tackling a list of items that they think need to be completed before they put their home up for sale.

If you partner with the right agent, they should provide you with a list of tips to sell your home fast that will give you the biggest bang for your buck. I’m going to give you a checklist of six things that can do this, no matter what type of home you have. More on this in a bit.

Here are three tips for finding a Realtor® when selling your home:
tips for finding a good agent to sell home

Once you have interviewed at least two or three agents and made a decision on which one to go forward with, there are three extremely important questions you should ask them:
tips on questions to ask your realtor when selling your house

While you will likely have several other questions in addition to the ones mentioned here, these three are absolutely critical to understand before you begin working with your Realtor® and are just the first of many tips to selling your house that will save you time, money, and stress.

It doesn’t matter if your Realtor®is a family friend, someone you found online, or someone from a local real estate office.

Knowing the answers to these three questions will not only help you get the most from the sale of your home but can also help you save thousands of dollars.

It can also help to establish a level of comfort with a person you will be working closely with over the next few months during the process of selling your home.

So, why are these three questions so important if you’re looking for tips to sell your home?

Let’s review each one in a little more detail.

 

How to Find a Good Realtor to Sell my House

QUESTION 1: How Much Do You Think You Can Sell My Home For?

This is an extremely important starting point that cannot be emphasized enough.

You might already have a rough idea on what your home might be worth. But do NOT base this off of Zillow’s Zestimate, or any other online home value estimate.

While sometimes they can be a useful place to begin, these online home value estimates don’t include several key factors that have a tremendous impact on your home’s value.
tips for an accurate home value

 

Online home valuations cannot and do not take these factors into their calculations.

In fact, despite being one of the most popular real estate websites, Zillow even admits that their home value estimates are not always accurate.

When interviewing a real estate agent, you want to make sure they know:

  • Your neighborhood
  • The local schools (whether they are good or bad), and most importantly
  • The comparable homes (also known as comps) that have sold near yours

 

Why does all of this matter?

This information can and should be used when negotiating with buyers and their agents to sell your house for the most money.

Most Realtors®will have a comparative market analysis (also known as a CMA) when interviewing with you.

What’s a CMA?

A CMA is a summary of homes that have recently sold in the area that are similar to yours.

There is a certain set of criteria that you want to make sure your listing agent is using when establishing a CMA for your property. These can vary depending on where you live. For this example, we’ll use a single-family-residence in the average suburban area. In Silicon Valley, these can include areas like Sunnyvale, Cupertino, Santa Clara, Los Gatos, Saratoga, Almaden, Willow Glen, Mountain View, Campbell, and other parts of San Jose. Properties that are being used as comps for a typical suburban neighborhood should be:

  • In close geographical proximity (within a half-mile radius is best and the closer the better – you can go farther if needed)
  • Most recently sold (within the past six months at most – more recent the better)
  • Close in the interior square footage
  • Same or close to the same number of bedrooms and bathrooms
  • Similar sized lot

These are the same requirements a real estate appraiser uses when appraising a property. The more similar characteristics that a property has to yours, the better.

After the agent has the selected comparable homes, they should make certain adjustments based on a few key factors:
home selling tips

Condition of the Home

The most important of all is usually the condition of the home. If your home is in a much better condition in comparison with one of the ones it’s being compared to, then your home should have a + adjustment and should be valued higher.

Location of the Home on Its Street

Another important adjustment can include the location of the home on its street. For example, if your home is located on your street where the average home is (i.e. not on a corner by a stop sign or intersection), and a home it is being compared with is on a busy street, your home may receive a 7%-10% positive adjustment in its potential selling price as a result.

So, if the home on the busy street that it is being compared to sold for $1,300,000, your home may be worth roughly $90,000 to $130,000 more.

 

Other Adjustments

Other tips for selling your home include adjustments used when evaluating the comparable homes’ different neighborhoods, different schools, and the property condition.

 

What’s Not Included in a CMA….But Should Be

There is one thing that is not typically included in a CMA or online home value estimate that can have a big impact on the potential sales price of your home.

This is the layout and floor plan.

It can vary drastically from house to house, and often comes down to personal taste. But if the layout and floor plan of your home are in line with what a certain buyer is looking for (usually an open layout), it can have a big impact on the desirability of your property.

But the same principle works both ways. If your home doesn’t have an ideal floor plan or layout in the eyes of your prospective buyer, they might be turned off, even if everything else is perfect.

 

Get An Accurate Listing Price When Selling Your Home

When speaking with and interviewing real estate agents and reviewing their proposed CMA, there is one thing you absolutely must be aware of:

There are some agents who will suggest a listing price that is higher than what is realistic. They do this so that you get emotional and excited about an inflated price and will decide to work with them to sell your home.

This would be considered bad tips for selling your home and should ring alarm bells.

When you sign a contract to work with an agent, it is usually an exclusive agreement between you and the real estate brokerage for a certain period of time. That period of time is up for discussion, but other brokerages will typically include six months for the duration of the agreement.

It may be very tempting to work with an agent who suggests or even “guarantees” they can sell your house for a higher amount than what you think your home is worth – but if it seems to good to be true, then it usually is. In this scenario, my suggestion would be to get a second opinion.

Red alert home selling tips advice: Make sure your agent backs up their suggested price with data (i.e. best comps with accurate adjustments).

Why is this important if you want the best tips for selling your house?

Because of the ever-important number of days on the market for a property.

 

How Can “Days On The Market” Affect Your Home Sale?

The longer your home stays on the market, the more you start to lose leverage as a seller. Depending on what type of real estate market it is, the average days on market can differ. In a seller’s market, the days on market are usually shorter. In a buyer’s market, they’re usually longer.

If your home is on the market longer than what is average, buyers will begin to wonder whether there is something wrong with your property that could explain why it hasn’t sold sooner.

Eventually, your agent will most likely tell you that the longer the house is on the market, the more it can hurt your sale. They may tell you that despite having done a substantial amount of marketing, the best thing that can be done is a price reduction.

But why wasn’t this considered when you first started working together, before you put your home on the market?

Obviously, nobody can predict the exact dollar amount your home will sell for, but a good Realtor® should be able to give you a detailed analysis on how they came up with their suggested price. Unfortunately, this isn’t always the case.

This type of scenario is common, but there are ways you can steer clear of it when you sell your home.

Understanding how the days on market can affect your bottom line would be one of a few towards the top of my list of valuable home selling tips.

So, How Do You Avoid An Unrealistic Listing Price When Selling Your Home?

home selling tips

The Difference With Condos

If your property is a condo, these comparison guidelines may be a bit different.

Comparing your property to others within the same complex is always best, even if you have to look beyond the last six months for the most recent sale.

 

Next, An Example

Imagine that you are about to sell a single-family residence and your real estate agent has just presented you with some comparable properties nearby.

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process of selling your house

With your hypothetical property and these three comparable properties in mind, here’s a rough idea of how your agent should be making adjustments.

Note: This is a similar approach to how we put a market analysis together for a prospective client. The Nestimator will take into account the best comps and your recent neighborhood market trends, and your SoldNest agent will adjust the analysis if needed. By doing it this way, our clients get the best of an accurate algorithm and a local expert.

Now, let’s break down what your home value would come out to based on the three comps. Again, this is just a rough example and the adjustments on price per sq ft would probably be a little different (this can be broken down into a whole different conversation).
real estate selling process

how to sell your home

 

If we wanted to, we could make an adjustment for the lot size. But depending on the area, the difference between a 6,000 and an 8,000 square foot lot doesn’t have as big of an impact as the other adjustments.
sell my house fast

Determining Your Home’s Value

 

Next, we take the sum of all three and divide by three to get the average.
sell my home

Taking the average of all three is a very basic approach and this is just an example of how your potential Realtor®should be looking at the comps and making adjustments. This can vary by market, neighborhood, and the type of home, but this gives you a good idea on the approach your listing agent should be using.

If you’re speaking to a listing agent who doesn’t understand this, doesn’t include adjustments, and is just discussing similar homes that sold close to yours, do not count on them to be able to negotiate top dollar when selling your home.

Once a Realtor®shows you these numbers, they should also have a suggestion on the list price for your property. But it’s important to keep one thing in mind; the list price and the sale price of your home are two very different things.

The list price can be used strategically to attract more potential homebuyers. Listing your home at a certain price does not mean that you need to sell it at that price.

Important Tips For Selling Your Home

A good agent with an understanding of the sales activity in your neighborhood will list your home at a price comparable to other homes that have recently been sold in your area.

They’ll do this with one goal in mind: to meet or exceed your expectations by selling your home for the maximum price in the least amount of time.

Our example provided a comparative market value for your home at $1,343,000. This may mean having a listing price of $1,299,000.

 

So, why is the listing price lower?

Because you will likely get more attention on your property than you would if you listed it at around $1,350,000.

The majority of buyers these days are doing their own research online. They have easy access to a lot of data, such as price per square foot in the neighborhood they’re looking in, as well as the average sold price. If you’re a bit lower than market value compared to other homes, you should get a bit more attention.

We always suggest listing a home a tad under market value or at market value to attract more eyeballs. This will depend on what type of market you’re in. For example, if you’re in a seller’s market where homes are selling quickly and buyers are offering a big percentage over the listing price, then you might want to think about listing under market value. This will help get multiple buyers interested and your agent should be able to maximize this and drive the price up. If you’re in a buyers market where homes are taking a little longer to sell without multiple offers, then you might want to think about listing on the high end of what your agent thinks it might sell for. In this scenario, your home may stay on the market longer but the chance of getting your asking price or better should be higher.

Key Takeaways From How to Find a Realtor to Sell my Home QUESTION #1:

  • You want a detailed analysis of your home with data to back up their suggested list price
  • If you think it’s an inflated price, get a second opinion
  • The suggested listing price should be a strategy to maximize the sales price

 

How to Find a Realtor to Sell my Home QUESTION #2: What is your marketing plan?

Through the MLS and automatic syndication to all of the real estate search websites such as Zillow, Trulia, Realtor.com, the majority of the marketing will be the same no matter which real estate agent you decide to sell your home with.

It’s the other “right” type of marketing that can make a difference.

And here’s something to consider. If you’re in a neighborhood where the same Realtor ® consistently sends out postcards saying something like “Just Listed”, then guess what? They are using the “wrong” type of marketing.

This does NOT help sell your home. Instead, this agent is using your home sale to market themselves rather than your property.

 

Home Selling Tips Red Alert

Make sure your agent is marketing your property, not themselves.

In the real estate industry, this is called “farming.” It’s a method that has been used for decades, but one that needs to change. In fact, it’s one of the reasons why SoldNest was founded.

Homeowners who sell their home are often completely unaware of this tactic. They may think that the Realtor®who has been selling homes in their area for the last twenty years is the neighborhood guru, and therefore is the best Realtor®to sell their house.

Maybe they are. But it’s not because of the postcards they send. You want to make sure they have a detailed marketing plan, in particular, one that will reach the most eyeballs of potential buyers.

 

Where are buyers looking?

The National Association of Realtors ® and Google recently teamed up to uncover trends and insights around digital media usage among home shoppers.

They found that over 90% of homebuyers search online. And maybe what’s even more astounding is that real estate related searches on Google have grown over 253% over the last four years.

The majority of buyers are searching online, and have social media accounts such as Facebook, Instagram, and SnapChat.

It’s critical that your agent has a unique game plan on how to advertise your home through digital marketing.

Remember, no matter which agent you decide to list with, you’re going to get a lot of exposure through the MLS, Zillow, as well as many other websites and applications.

But if you can tap into this buyer pool even further, your chances of selling your home for maximum value increase.

 

More Tips For Selling Your Home

Things That Do Not Have An Impact On Your Home Sales Price

Here are a few things that do not have an impact on how much your house will sell for:

  • Postcards

    These do more to market the Realtor®than your home.

  • A website without proper marketing.

    Many listing agents will say they’ll have a website made for your home. But the question you should ask is “what are you going to do with it?” Most only get it to impress the homeowner. A website or domain name of your home means absolutely nothing unless they plan on advertising your home online. Most will only put the domain name such as www.youraddress.com on the flyer that is distributed at your open house. But this doesn’t make sense since, by the time the buyer sees the website address, they’re already at your home.

  • The name of their brokerage.

    Some Realtors®will say something like “Our company is the 2nd largest in the nation.” That’s nice, but how does this sell your home for more? It doesn’t. If this was twenty or thirty years ago it would have, but not today. The buyer doesn’t care who the listing brokerage is. They care about things like the location, schools nearby, and the condition of the property.

    Many Realtors®will use this brokerage point to try and gain credibility, but it has no impact on your home’s selling price. The number of agents and offices a brokerage has does not help sell your home. Any agent or buyer who is interested in a property like yours will know about your home being on the market when your agent places your home on the MLS.

  • The “Homebuyers Lined Up Around The Block” Line

Be extremely cautious of real estate agents who tell you that they have a buyer looking in your area.

Unfortunately, this happens all too often and similar to the exaggerated listing price suggestion, this is used to get you excited.

Sometimes an agent really will have a buyer and that agent is trying to be pro-active for their client. However,f they really do have a buyer, then ask them to bring the buyer to see the house before signing a contract. Do NOT sign an agreement with an agent for this reason. Even then, if you want to maximize your homes selling price, then you want full exposure and the most amount of buyers knowing your home is for sale. By doing so, you will let the market dictate what your home is worth. Only showing your home to one buyer will usually minimize your potential sales price.

So, what should your agent include in their marketing plan for your property?
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Home Selling Tips When Marketing Your Home

The Importance of Digital Marketing

With most buyers searching online either on a website or on one of the search apps on their phone, it’s critical your listing agent has a targeted digital marketing plan to maximize exposure when selling your home.

The reason why is simple. The more eyeballs that see your home, the more potential homebuyers that will come to visit. The more buyers that see your house, the more demand it receives, and the better the chance you have of selling for more money.

If we know that over 90% of homebuyers search online, then why would you want your marketing dollars spent on neighborhood postcards or newspaper ads? The answer is that you don’t. The chances of your neighbor buying your home are extremely low, and the chances that a buyer finds your home for sale in the local newspaper is also extremely low. Again, many agents use this approach to use your house to market themselves as the “local expert” to other homeowners, not buyers.

 

Getting Exposure

You want your home to have the highest exposure possible. This includes the MLS, all syndicated real estate search websites, and digital marketing.

Unless there’s a very specific reason that you do not want your home placed on the MLS, tips for selling your house “red flags” should be going off if an agent tells you this.

There are some listing agents who might suggest this, so that they can have the least amount of advertising as possible to other agents and buyers, giving them an opportunity to try and find their own buyer and double their commission.

This is a major problem in our industry and one that we’re going to fix.

As previously mentioned, you’ll get the majority of the same marketing no matter which Realtor®you decide to list your home with. But the extra marketing that is done the right way can help sell your home for more money.

How to Find a Realtor to Sell my House QUESTION 3: How much do you charge?

When selling your home, your goal is to put the most amount of money in your pocket. Paying the lowest amount in real estate commissions helps you do that. It’s easy to figure out what you could potentially net from your sale by using our home sale calculator.

One of the biggest misconceptions is that a Realtors ® commission is non-negotiable.

But here’s a little secret: real estate commissions are negotiable and rank towards the top of valuable tips for selling your home.

Here’s how it works:

  • When you sell your home, you pay your listing broker and you pay the buyer’s broker.
  • Depending on your area, this can be 2.5 – 3% each, which makes a total of 5-6% in commissions.
  • Many listing agents will avoid talking about their commissions when initially speaking with you because they don’t want to have an uncomfortable conversation. Many of them can’t justify the real estate commission that they charge.
  • Some may tell you that they are suggesting a lower than average commission, but what they don’t mention is that they are also paying less to the buyer’s brokerage.

If you’d like to see a breakdown of your potential total closing costs and what they consist of, you can take a look at How Much Are Sellers Closing Costs in California?

 

Remember to always ask the agent how much they charge, what the total commission is, and how much is going to their brokerage and how much to the buyer’s brokerage.

When a home is listed for sale and when an agent uploads it into the MLS, there’s a section that shows how much the seller is paying in commission that only other real estate agents can see.

Anything less than the average can sometimes convince buyer agents to not show your property to their clients. Your goal should be to pay the lowest amount in real estate commissions while receiving top-notch service from an experienced real estate agent.

 

The Scoop on Uploading To The MLS, and Other Property Sites

Before real estate search websites and applications were around, a listing agent’s job of “marketing” a property was much harder than it is today.

Today, it only takes your agent about half an hour at the most to input all of your home’s information into the MLS. When they press submit, it’s automatically syndicated to hundreds of websites, including all of the big ones.

So if an agent’s job of marketing a property has become much easier, why are homeowners still paying the same amount in real estate commissions as they did before these resources were available?

It’s a great question that I couldn’t answer and is one of a few reasons why SoldNest was founded.

Compared to the average 5-6% total commissions charged by other Realtors ® and brokers, we only charge 3.5% if the buyer is represented by another brokerage (1% to SoldNest and 2.5% to the buyer’s brokerage) and only a total of 2% if the buyer is represented by SoldNest (1% to your SoldNest agent and 1% to the SoldNest buyers agent). All of our agents are full-service Realtors®, experts at negotiating, and are with you from start to finish.

 

SoldNest 1% Listing Fee

 

Tips For Selling Your House Step 2: Tips For Getting Your House Ready to Sell

Now that you’ve decided which listing agent you’re going to partner with, it’s time to get your home ready to sell.

 

The First Impression

 

“You never get a second chance to make a first impression,” the old saying goes, and it’s especially true when selling your home.

Whether it’s at an open house or a private showing, it’s imperative to make a great first impression to all potential homebuyers. When a buyer visits your home, they generally get a good idea of whether or not they like it within the first twenty seconds or so.

There are numerous things to consider in order to get your home to look its best. Not all of these are mandatory and you may not be in a position to do any of them, but the more appealing your home looks to a homebuyer, the better the chance of selling your house for the highest amount in the shortest amount of time.
get house ready to sell
getting house ready to sell
get ready to sell your house

With that being said, each property is different and not all of these will get you a return on what you spend. Your agent should be able to walk through your home and give you suggestions on tips for selling your home fast that will get you the biggest bang for your buck.

6 Tips For Getting Your Home Ready to Sell

Here’s a list of six things that can usually bring you a return on investment.

1. Declutter

Yes, this can be a pain. However, this plays a huge part in showing buyers how much your space can be maximized. 

Space and storage are biggies. Take down the family photos, clear the countertops, remove all of the small knick-knacks, and straighten up the closets. It’s ok to put everything in the garage when your home is on the market. This is quite common and is what most sellers do. 

2. Paint

Whether it’s the exterior, the interior, or both, a fresh coat of paint is something that can make your home really stand out. 

A home that hasn’t had a paint job in a long time can do the opposite. If you don’t have the time or resources for a paint job, then no biggie. If you have any leftover paint of the same color, then you may want to think about applying some touch-up. 

And stay with neutral and lighter colors. White, off-white, or a light brown color usually work best for the interior. The lighter the color, the bigger it will make the room look. Dark colors will do the opposite. 

3. Flooring 

The flooring that appeals to many buyers right now is hardwood. Laminate and vinyl also make a great impression. 

Do you have carpet in any of your rooms and hardwood underneath? You might want to think about removing the carpet and showing off the hardwood. 

4. Lighting

The more the better. If your home has natural light, then it’s a big plus and you’ll want to show it off.

Do you have any outdated light fixtures? If so, it’s time to kick them to the curb 🙂

Pendant lighting, Edison bulbs, and simple recessed lighting are what’s hot with today’s designers and buyers. Recessed lighting can make a huge difference, but can be a little costly.

Here are two things that aren’t costly that can also help with lighting…

Have the windows cleaned inside and out. Believe it or not, this makes a tremendous difference. And make sure all of your light bulbs are bright and not missing. Walk in every room and check each one. Sometimes just installing new light bulbs is all you need.

5. Update Your Hardware

You’d be surprised at how easily doorknobs, drawer pulls, locks and handles can start to look aged.

Take a good look at your existing hardware, and consider upgrading to newer models. And don’t forget the hinges. 

6. Colorful plants and flowers

Did you know that most buyers know if your home is for them within the first 15 secondsAnd when they pull up to your home the first impression is everything. 

Planting colorful plants and flowers can go a LONG way. Not only in the front yard – but also in the back. 

I’m not talking the exotic expensive stuff. I’m talking about the inexpensive flowers and plants you can purchase from Home Depot.

It gives off a positive vibe as potential buyers are walking up to and around the property.

Tips on How to Stage Your Home

Staging can be an added benefit by helping to get a homebuyer emotionally excited about your house.

A good professional home stager will know which furniture should be placed where, what color scheme will go best, and can also give advice on any work you might have done on the property. They know how to maximize your space.

Although staging can sometimes make a difference in appearance, it’s not always mandatory.

If you’re not using a home stager, you and your Realtor®can boost the overall appearance and feel of your home with strategic furniture placement, by considering things like:

  • Buyers want to visualize how things will fit
  • Will their couch go in that corner?
  • Does it make sense to mount the TV on that wall?

Placing furniture and other items in their ideal locations can help increase buyer enthusiasm about making an offer on your home. Maximizing your space is another item that ranks on the top of the list of tips for selling your home.

Improper staging or leaving your home vacant can leave buyers less interested in purchasing your home and would not be recommended if you’re looking for tips on how to stage your home.

When selling your home, one of the first things you’ll want to do is sit down with your listing agent and get their opinion on what should be done. They should be able to provide you with their opinion and then you can choose what you want to have completed.

 

Tips For Selling Your Home Step 3: Preparing and Planning

 

Now that you have your home ready, the next steps include inspections, disclosures, and some of the pre-marketing.

Your listing agent will guide you through this process.

It’s very important that you fill out all of the necessary disclosures and paperwork. When selling your home, and depending on what state, city, or even neighborhood you’re in, there are certain documents that you need to fill out.

A few of the important ones include certain disclosures, in which you’ll need to answer questions and disclose every single thing you know about the house and neighborhood. This not only helps you from preventing a potential lawsuit down the road from the buyer for not disclosing something about the house that you should have, but it can also help the buyer make a better-informed decision when thinking about writing an offer.

The more information the buyer has up front, the less likely the chance they back out of the sale. These disclosures are part of a package that your listing agent should have ready for any interested buyers and/or their agents.

During this same time, there are several things that your agent will be doing.
what to do to get your house ready to sell

Tips For Selling Your Home

Property Inspections

When you sell your home it’s not mandatory that you do property inspections. However, it’s almost always beneficial.

The most common inspections include a home, termite, roof, pool, and chimney. But depending on your state and the area you live in, there are other inspections that can be common.

We almost always advise our clients to get a home and termite inspection completed.

 

Why Do A Home Inspection?
home inspection tips for selling your home

Tips For Selling Your Home Step 4: Listing Your Home for Sale

 

After all of the prepping and planning, it’s time to put your house up for sale.

“Going on the market” usually refers to the home being on the MLS. Your Realtor®will input all of your homes information including the photos, video and property description into the MLS. The MLS is a database used by agents and brokers. This usually only takes about half an hour or so.

Shortly after, your home is automatically syndicated to hundreds of real estate search sites including Zillow, Trulia, Realtor.com, Homes.com and many more. At the same time, all of the other marketing that your real estate agent has planned should also be starting.

Allowing access to your home can definitely fall under home selling tips and is important. Your agent will usually leave a lockbox containing a house key that allows any potential buyers (only with their agent) and their agents to visit the property.

The easier it is for potential buyers to access your home, the greater your chance of reaching your target sales price.

Your agent should coordinate with you on how buyer agents should schedule a showing. You can have them call your agent directly and then they would call you (assuming you’re still living in the property) to confirm the time, or the buyers’ agent can call or text you to confirm the time.

If the latter is the route you choose, your listing agent should leave a comment in the private remarks section of the MLS (only other agents can see this) giving specific showing instructions.

Make sure your agent is specifically clear on how and when to show your property. If certain times of the day are better or if a certain amount of time is needed in advance, then it’s especially important that your agent puts a description under the private remarks so that other agents are aware.

 

Open House Tips For Selling Your Home

 

Open houses are great, but usually aren’t the deciding factor in selling your home.

It’s an opportunity for buyers to view the home so that they don’t need to schedule a private showing with their agent. Open houses will usually receive the highest amount of traffic on the first weekend after the listing is posted.
do open houses help sell my home?

Broker Tours

A broker tour is usually held the morning of a weekday. It’s meant to have other agents and brokers come and preview the home.

 

It doesn’t hurt to have a brokers tour, but just keep in mind that any interested agents and buyers will already know that your home is on the market. The brokers’ tour does give the opportunity to view your home, so having one doesn’t hurt.

Most of the time, the agents who attend are simply there because they like to look at homes in order to stay up to date with market activity.

 

Keeping Emotions At Bay

Selling a house can be a very stressful time – especially when your home is on the market and other people are coming through to look at it.

If you’ve owned the home for a long time, maybe there’s an emotional attachment.

Removing all or most of your emotions can drastically help during this time. It’s hard to do, but looking at this as a financial transaction can benefit you in helping to transition to your next phase in life.

 

Tips For Selling Your Home Step 5: Waiting for an Offer

 

Waiting, waiting, and more waiting. This is what happens after your home is put up for sale, and the anticipation can start to build quickly.

Your Realtor®should be giving you consistent updates on your home’s activity at least once a week, if not more.
the home selling process

Your real estate agent should open up a dialogue with buyers and other agents to not only gauge interest but to also get feedback.

 

Remember the Days on the Market

The number of days your home is for sale can have an effect on your potential selling price. The longer your home is on the market, the more leverage you start to lose and the more buyers will gain.

Buyers will start to wonder why your home hasn’t sold. Is there something wrong with the house? Is it overpriced? This is where a price reduction might be necessary. Usually, when this happens, the home was overpriced to start with, either suggested by the Realtor®or an adamant homeowner who thought their home was worth more than it is.

This is why it’s imperative that your listing agent understands the comps as well as current market activity and is well versed on the adjustments that were made before suggesting a list price.

 

What happens when a buyer is interested?

When a buyer is interested in your home, they will usually ask their agent to start gathering info about your property.

This will mainly consist of looking at recent comps that have sold, as well as asking for any disclosures and/or inspections you may have done. Depending on your state and area, the protocol may be a little different, but it’s always better to be over prepared with as much information upfront so that they can make a better-informed decision with their offer.

After looking at the comps and asking your agent for any disclosures and inspections you might have, the next step for the buyer would be to discuss with their agent about writing an offer. The discussion is about price, contingencies, and a few other terms that will be included in the offer.

Your agent should go over what you want to look for as a seller in an offer. Price is obviously number one, but there are a few other key things your agent should be looking out for when a buyer submits an offer. We’ll touch on these shortly and all of these are great home selling tips.

Is price the only thing that matters?

The goal is to get the highest price when selling your home, but the highest price is not always the best offer.

Your real estate agents job is to negotiate the best possible price with the best possible terms. Part of what makes a great listing agent is knowing how to negotiate with buyers and their agents. Some Realtors®are not well versed in this and don’t utilize certain negotiating tactics when trying to maximize your home’s sales price.

To ensure your listing agent will know how to negotiate top dollar for your home, ask them what their strategy is to do this. This should not be a broad answer but should be backed up with facts, such as statistical data on recent neighborhood sales and current market trends and why they think they can get the sales price that they told you.

When an offer comes in, your agent will let you know and will usually want to sit down and discuss to ensure you understand the details.

You have three options when a buyer submits an offer on your home.
home selling tips with the offer contract

Rejecting the offer means simply that – you reject it and don’t want to negotiate with them. This happens sometimes, but usually in cases when there’s a lowball offer, or for some reason there’s a waiting period where the seller might want to wait to look at all offers.

If you accept the offer, you are accepting the buyers offer price, contingency periods, and anything else that they have stated or outlined in their offer. When you do, the contract is ratified and the clock starts ticking.

The third option is to send them a counter offer. This usually isn’t done how you see on the real estate listing TV shows where they only talk and negotiate on the phone. This can happen, but it’s followed up with legal documents that are part of the offer contract.

 

Home Selling Tips That Include Possible Items In A Counter Offer

  • Price
  • Contingency timelines
  • Close of escrow
  • Rent back (so that you can stay in the house a bit longer after the sale)

In some cases, there will be one counter offer that you send to the buyer. If they agree to it and sign it, then you’re in contract.

In other cases, there can be numerous counter offers, where your listing agent and the buyer’s agent are negotiating until either both parties agree on all terms, or you don’t and the offer is void.

Once you and the buyer agree on terms and the contract is ratified and the sale turns to pending, it’s not time to celebrate just yet.

There are contingency periods that the buyer has to complete to further do their due diligence.

 

Tips For Selling Your Home Step 6: Reviewing the Homebuyer’s Contingencies

Usually within the first few days (at the most), the buyer will deposit a “good faith deposit”, which is commonly known as an escrow deposit.

Depending on the state and area you live in, this can be different amounts, but when selling a home in California, this is usually 3% of the purchase price.

This deposit will go towards the buyers down payment but is held in escrow in good faith of the buyers’ agreement to purchase your property.

The buyers’ escrow deposit is NOT at risk until they release all of their contingencies. If they release all of their contingencies and for some reason want to back out of the transaction, then their deposit can be at risk.

As soon as the contract is ratified, the clock starts ticking for the buyer’s contingency periods. Their lender will start on the loan process immediately, their appraisal will be ordered, they will start ordering any inspections, etc.

 

Common Contingencies in a Homebuyer’s Offer

 

Contingency periods

On an offer contract, the buyer has options if they want to include contingencies and how long these should be for.

The three most common contingencies are the buyer’s loan contingency, an appraisal contingency, and an inspection contingency.

Another contingency that you might see is an offer contingent on the sale of the buyer’s home.

 

The Three Most Common Contingencies In A Homebuyer’s Offer

Buyer Loan Contingency

This is contingent on the buyer getting their loan conditionally approved. Most homebuyers will get pre-approved before they start really looking at homes for sale.

A pre-approval means the lender did a credit check, checked the buyers’ bank statements for sufficient collateral and reserves, as well as gathered their most recent pay stubs, W-2’s, tax returns and so forth to make sure they qualify for the home loan.

When a contract is ratified, the underwriter at the buyers’ lender will also need to see other documents to give them the full conditional home loan approval. These include the purchase contract, title report, and a few other documents. A buyer will release their loan contingency when they and their loan officer are 100% confident that the financing will not be an issue.

Appraisal Contingency

When a homebuyer is purchasing a house for sale and is receiving financing from a lender, the lender will require an appraisal of the property.

Since the lender is putting in the majority of the money on the purchase, they want to make sure the collateral being used for the home loan (your house) is worth what the offer price is in the contract.

If the appraisal matches the purchase price or comes in higher, then everything is good and the buyer will release their appraisal contingency.

If the appraisal comes in less than the purchase price, then the buyer can back out of the transaction, try to renegotiate with you and your Realtor®, or if they really want the house, they will end up paying bit more out of pocket.

Banks will use the purchase price, or the appraised value for qualifying factors, whichever is less.

Inspection Contingencies

This is a time frame for the buyer to do any and all inspections.

These can include the same inspections you might have done or different inspections. Sometimes a homebuyer will want to have their inspections completed, even though you might have already provided inspections upfront. This is perfectly normal. Purchasing a house is a major financial transaction and it’s always better that everyone involved does as much homework as possible and not try to avoid any shortcuts.

Once the buyer is confident on the inspections, they will release their inspection contingencies.

The Next Steps

When the buyer releases any and/or all of their contingencies, they will do so on a legal document that is part of the contract and signed by all parties. The typical timeline can be anywhere from 0-21 days (give or take) for any of the contingencies.

Some buyers will waive their contingencies in their offer (this is much more common in a seller’s market where there is low inventory) and some might leave them as they are standard in the contract.

They can also be modified in the offer contract. For example, if an inspection contingency is 17 days standard in the contract, a homebuyer might take this down to 10 days to make their offer look a little stronger.

As a seller, this is a good thing, as it shows more commitment from the buyer.

As a seller, once you accept an offer, you’re waiting for the buyer to release their contingencies. When they do, their escrow deposit can be at risk should they want to back out of the transaction.

During this same time and as you get closer to the closing date, you can really start to get everything ready for your next adventure and start making immediate plans if you need to.

 

Tips For Selling Your Home Step 7: Waiting for the Lender

After the buyer removes their contingencies, it’s really a waiting game for their lender to send their loan documents to the escrow company to be signed.

There are conditions (paperwork) that the buyer needs to fulfill before the underwriter will give the ok to draw the final loan documents, but usually this has nothing to do with the seller.

About a few days to a week before your estimated closing date, you’ll be scheduled to sign the final legal documents of the transaction at the escrow company. Your agent will keep you informed about this.

You’ll be signing the legal documents that will transfer the property to the buyer. You’ll need to bring your drivers license and your bank account info (routing and account info) to give to the notary so that the escrow company can wire your home sale proceeds as soon as the transaction is complete.

Around this same time, the buyer will be doing a final walk-through of your home. This is meant to make sure the home is in the same condition as when they first saw it. The buyers will sign a disclosure that is part of the contract verifying the property condition is the same and good to go.

Once the underwriter at the buyer’s lender gives the green light, they will draw up the loan documents and send them to the escrow company for the buyer to sign.

 

Tips For Selling Your Home Step 8: Closing

When the buyer signs their loan documents at the escrow company, you’re a couple days away from the transaction being official.

It’s important that when you leave the home, you leave it in good condition with nothing left behind, and if there are any special instructions coordinated in the contract, be sure to follow through on them. Your agent should remind you of what these are, if any, and should also be explaining the closing process.

A few key things are to leave all the sets of keys, garage door openers, as anything else you can think of that should stay behind.

At this same time, it’s safe to take the utilities out of your name.

Here’s how the closing typically works. Again, this will depend on which state you’re in, but in California, this is the usual process:

 

Home Selling Tips and The Three Steps To Closing A Sale

Step 1

Once the buyer signs their loan documents at the title company, the escrow officer will then send them back to the lender so that the underwriter can make sure all of the T’s are crossed and all of the I’s are dotted. Once the underwriter signs off on the loan documents and there are no more conditions for the buyer to fulfill, the loan is ready to fund.

Step 2

Funding means that the lender sends the buyers’ loan amount to the escrow company via wire. Once the escrow company receives the funds, they will disburse the funds accordingly (i.e, paying off the sellers mortgage, paying commission checks to the buyer and listing agent’s brokerage, net proceeds to the seller, etc).

Step 3

Usually, the day after the funding is when the transaction becomes official. This is known as recording.

The recording is a process where the escrow/title company physically sends someone down to your County recorder’s office with a copy of the grant deed. Then, someone at the counties office will give it the final stamp of approval. Once this happens, the transaction is official and you can officially celebrate!

By now, I hope you have learned numerous tips for selling your home. Each and every step is an important one, and all are interconnected. Selling your home may seem complicated, but with the help of the right real estate agent, it doesn’t have to be. If you’re in Silicon Valley and thinking of selling, we’d love to show you what five-star service is all about and how selling with SoldNest can save you tens of thousands.

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Where is Silicon Valley Real Estate Headed?

Have you asked yourself, “What’s going to happen to Silicon Valley real estate?,” or maybe “Is there a Silicon Valley real estate market bubble?”

If so, you’re not the only one.

Silicon Valley real estate is a topic that has been often discussed lately.

Why?

Because over the last several years, the real estate market in Silicon Valley has seen dramatic year over year price increases.

If you’re thinking of selling your home, you might be wondering when you should sell.

And if you’re thinking of buying, you may be wondering if you should buy now or wait.

I’m not going to tell you when you should sell or buy. But what I am going to do is educate you a little more about the Silicon Valley real estate market, so that you can make the best possible decision.

I’m going to dive in and discuss three things:

  1. What’s causing the dramatic increase in prices?
  2. How does this impact buyers and sellers?
  3. Where is the Silicon Valley real estate market headed?

My goal is that by the time you’re done reading this, you’re a little more savvy on the Silicon Valley real estate market than you were before.

I’m also going to give my opinion on whether we’ll see a major downturn and when.

More on that in a bit.

So, without further adieu.

What’s causing the dramatic price increase in Silicon Valley real estate?

First things first.

Real estate prices are controlled by supply and demand.

The value of something is determined by the quantity available and the number of people who want it.

For example:

  • Way back in 2010, a Picasso painting titled “Nude, Green Leaves and Bust”, sold for $106.5 million at an auction in a matter of eight minutes.

Why?

  • Supply and demand.

There’s only one of them in the world and it’s highly sought after by many collectors.

All it took is eight minutes for someone to make an astronomical offer.

What if there were 1,000 of them?

  • Chances are the price would have not even been close to $106.5 million.

The same is true in real estate.

  • The supply is the number of homes for sale.
  • The demand is the number of buyers.

A low supply of homes for sale, plus high demand, usually means an increase in prices (Also known as a “seller’s market”).

A high supply of homes for sale, with average to low demand, usually means a decrease in prices (known as a “buyer’s market”).

Can you guess which one applies to Silicon Valley real estate over the last few years?

Now that we know what causes this, let’s look at specifics here in Silicon Valley, starting with the answers to these questions:

  • Why is the supply low?
  • And where is the demand coming from?

First, I will give my reasoning for the low supply. There are few factors:

  • Silicon Valley is going through a major change in demographics – something the area hasn’t seen to this extent before.
  • As most people know, Silicon Valley is the tech capital of the world. As a result, a high percentage of the jobs here are tech related.

So, why is this important?

  • Many people of the generations that have lived in Silicon Valley for 10, 20, or 30 years or more, are not in the tech industry.
  • This is one of the main causes for the increase in Silicon Valley home prices.

How?

  • Because in order to afford a home here, you need to make a higher than average salary.
  • This means that homeowners who are not in the tech industry (or another above average paying field), can’t get a mortgage for a new home.

Meaning they can’t move. Unless…they move out of the area.

This is what many sellers in Silicon Valley are doing. Not all of them, but a much higher ratio than in previous years.

This isn’t like it was in years past where the average person could sell their home and move up to a bigger one nearby after some time.

Compared to the years prior to the great recession, where all you needed to do in order to get a mortgage was be able to fog a mirror, the lending guidelines for a home loan are now more stringent.

And…

The average Silicon Valley home seller simply can’t afford to buy here.

This is why some of the monthly numbers of homes for sale are some of the lowest they have ever been in Silicon Valley.

Ok, now what about the demand? How in the heck are there so many buyers that can afford to live here?

Not only that, but how are some of these buyers offering substantial amounts over asking price?

The answer? Tech.

Just how it affects the supply, it also has a major impact on housing demand in Silicon Valley.

Here’s how: stock options.

But not just stock options. Other things such as:

  • Salaries
  • RSUs (restricted stock units)
  • ESPPs (employee stock purchase plan)

First, let’s discuss how these buyers are qualifying for their new mortgage.

In order to get pre-approved, lenders look at three things:

  1. Credit
  2. Collateral
  3. Capacity

What exactly do these three things refer to?

  • Credit is the credit score.
  • Collateral is the down payment.
  • Capacity is the debt to income ratio.

The biggest hurdle for most buyers on getting pre-approved is the debt to income ratio.

Most lenders will allow a debt to income ratio of 43%.

This is calculated by taking into account:

  • The new principal and interest mortgage payment
  • Monthly property taxes and insurance
  • The minimum payments that show on the credit report

The sum of these is then divided by the gross monthly income before taxes.

Let me break this down a little further and give you an example. Let’s take a property listed at $1,200,000.

  • Let’s assume the normal 20% down, which would be $240,000 in this scenario.
  • That leaves a mortgage of $960,000.

Now let’s say the interest rate is 3.75%.

Here’s how the monthly mortgage payment would break down.

  • $4,446 for the principal and interest payment
  • $1,250 for property taxes (sales price x .0125% /12 months)
  • $100 for homeowners insurance

This brings a total housing payment of $5,796.

Now let’s factor in $500 for the minimum payments on the credit report.

  • This gives us a total monthly outgoing of $6,296, if the maximum debt to income ratio is 43%

This means in order to qualify on the income portion for the loan, the gross monthly income would need to be a minimum of

  • $14,700 a month
  • Or, $176,400 a year

At a minimum.

Most people in Silicon Valley aren’t making that much unless they have a great self employed business or are in tech.

And this example is based on a $1,200,000 purchase price.

Many homes are much higher than this.

Now that we know what’s needed to qualify for the capacity requirements, let’s talk about the collateral.

Where are these buyers getting their 20% down payments?

  • Stock options (mostly).

If you aren’t familiar with how stock options work, this part is important.

In my opinion, there is a key factor that will impact the future of Silicon Valley real estate: employee stock options.

Employee stock options, also known as ESOs, are stock options granted by the employer to the employee, given as extra incentives.

Here’s how they work:

  • Employees are given the right to purchase shares at a predetermined price (usually stock price at time of hire)
  • They have the option to “exercise” (sell) them after a certain period of time.
  • (Usually this timeframe is every 12 months for four years).

Let’s say a new employee just started this month and the company granted her 4,000 shares.

  • With a four year vesting period, this means she has the option to “exercise” (sell) 1,000 shares every year.

Let’s say the stock price was $100 at the time of her hire and after the first year is now $120.

  • This means she can sell 1,000 shares for a profit of $20 a share.

This equals $20,000…for the first year.

This is in addition to her salary and other incentives.

What happens if the stock price increases over the next 3 years?

  • More profit for the employee.

Now…

Let’s dig a little deeper and start seeing the actual numbers.

As you know, many tech giants have their headquarters based in Silicon Valley.

Some of these companies include Apple, Google, Facebook, and Netflix.

Let’s use Apple as an example.

Let’s look at their stock price for the last 5 years.How stock prices affect real estate prices in Silicon Valley

  • Starting in 2013, the price hovered between $55 and $80.
  • Towards the end of 2014, it almost reached $120…

And look what it has done since.

Let’s say a new hire started in 2013 when the price was $70.

  • She was granted 5,000 shares with the option to cash in 25% (1,250 shares) every 12 months.
  • In 2014, after the first 12 months, she cashes in roughly $62,500 (1,250 shares x $50 difference in grant price of $70 and selling price of $120).
  • As the stock price increases after the second, third, and fourth years, she has the option to sell the shares and profit the difference of the stock price when she was granted the shares versus the current selling price.

This is just a rough example of how employee stock options work.

The number of options granted to each employee depends on their position, experience, how much the company wants them, among other factors.

But…

If we look at the stock prices over the last four to five years of the tech companies here in Silicon Valley, many of them have been on a persistent upward trajectory.

This is where many buyers are getting their down payments and are able to afford the homes here in Silicon Valley.

There’s no doubt that the tech industry has played a major factor in both the supply and the demand for Silicon Valley real estate.

In fact…I can prove it.

We wanted to compare the stock prices of some of Silicon Valley’s biggest companies with the real estate prices in Silicon Valley over the last three years.

So, we decided to look at the stock prices of three of the biggest tech employers here:

  1. Apple
  2. Google, and
  3. Facebook

Apple

Apple's stock prices can impact the real estate market in Silicon Valley

Google

Google's stock prices can impact the real estate market in Silicon Valley

Facebook

Facebook's stock prices can impact the real estate market in Silicon Valley

Now, take a look at the home prices in San Jose over the last three years:

Average real estate prices in Silicon Valley

Let’s put them on the same graph and see what it looks like.

Stocks impact real estate in Silicon Valley

If that doesn’t show the correlation between Silicon Valley real estate and the tech industry, I don’t know what does.

I’ve been asked numerous times how buyers are affording these prices and how they are offering so much over the asking price.

There are two answers to that question:

  1. Salaries, and
  2. Stock options

Remember the three things buyers need in order to get pre-approved?

  1. Credit
  2. Collateral, and
  3. Capacity

Here’s what is happening with Silicon Valley buyers:

  • They’re qualifying for the capacity (debt to income ratio for their loan) with the salaries
  • And they qualify for the collateral (down payment) with stock options
  • Another factor that doesn’t get talked about that much is the fact that many families who are buying have both spouses working

We’re at a point now where this is pretty much mandatory in order to buy a home in Silicon Valley.

It also helps when buyers make an offer over list price.

There’s an increase in the mortgage payment, but there are two well paying salaries instead of one.

And remember…

  • When a buyer offers over the asking price, they are not paying the full amount out of pocket.
  • The average buyer makes a 20% down payment with the lender putting in the other 80%.
  • This means that if they offer $100,000 over asking, they are putting $20,000 out of their pocket and financing the rest.

Where is the Silicon Valley real estate market headed?

Everyone wants to know what’s going to happen with home prices in Silicon Valley.

Many want to know:

  • Will they keep increasing?
  • Will they ever come down?

But the truth is…nobody knows.

All we can do is look at the data and trends and make an educated guess.

I’m going to give you my opinion on what I think will happen with Silicon Valley real estate.

But first, I’ll explain the difference between Silicon Valley home buyers now and Silicon Valley home buyers of years past.

In fact, it really applies to much of the United States, and not just Silicon Valley.

So, what’s the difference?

  • The majority of buyers get financing when they purchase a home.

Let’s look at the characteristics of a buyer today.

As we know, home buyers need:

  • A good credit score
  • A sufficient down payment, and
  • Well paying jobs

This is what the banks look at when underwriting a purchase loan.

But what about in years past, specifically before 2008. What was required then for each of the following:

Credit?

  • A minimum score of 620.

Capacity?

  • Show a business card and state your income on the loan application with no proof of pay stubs or tax returns.

Collateral?

  • It simply wasn’t something to worry about. Some banks would lend 100% up to $750,000.

So what did this mean at the time?

  • There were buyers who would have less than average credit, no money to put down, and essentially lie on their loan application about how much they made.

Any guesses as to why the great recession happened?

Going back to Silicon Valley today, I’ve seen many articles, posts, and discussions talking about a Silicon Valley real estate bubble.

Can this happen? Technically, yes. Anything can happen.

But in my opinion, this isn’t a bubble.

Why?

  • Because it’s real money
    • The buyers are real
    • Their down payments are real
    • Their salaries are real

One of the reasons for the housing crisis following the Great Recession was due to a lot of foreclosures and short sales.

Why did these occur?

  • Because many buyers purchased their home with little or no money down.
  • When they saw their home value decrease, many of them decided to simply walk away.

Some of them lost their jobs and some of them simply never should have been given a loan in the first place, because their real income fell short of what they told their lender it was.

Now let’s compare this to today’s buyers.

Let’s say the Silicon Valley real estate market slowed down and prices dropped by a large amount, like 20%.

  • The majority of buyers who have purchased over the last few years made a 20% down payment.
  • This means that their home value would be about equal to what they owe.
  • What’s more, is that many of these buyers have gained a large amount of equity appreciation as well.

What can we conclude about the Silicon Valley real estate market from this?

If the Silicon Valley real estate market was to decline by a substantial amount, the homeowners would be far less inclined to walk away from their homes compared to home buyers of the pre-recession years.

Now let me tell you where I think the Silicon Valley real estate market is headed.

I think we’re going to keep seeing a steady increase in prices (maybe not as dramatic) because of two things:

  1. Short supply
  2. High demand

As previously mentioned, many homeowners who have lived here for 10, 20, or 30 years, would love to sell, but they simply can’t unless they moved out of the area.

But, there are three things that I think could cause home prices to fall in Silicon Valley.

  1. A big catastrophe such as an earthquake or war
  2. An increase in mortgage rates
  3. Stock prices of tech companies in Silicon Valley drop

The first one is unknown if and when it would happen. If it did, home prices usually drop when wars occur out of fear, which causes less demand from buyers.

Regarding the second point, mortgage rates have been very low for almost the last 10 years or so. Eventually they will increase.

When they do, not only does that mean that a potential buyer’s payment will be higher, but it also means that they will qualify for a lower purchase price.

The debt to income ratio has the greatest impact on a buyers purchasing power, and when rates go up, their purchasing power goes down.

  • A current interest rate of 3.75% on a $1,000,000 loan amount, equals a principal and interest payment of $4,631.
  • At a 4.75% interest rate, the principal and interest payment is $5,216.
  • This is a difference of $585 a month.

A 5.5% interest rate would be a difference of $1,047 a month ($5,678 payment).

When interest rates start to have an impact on the payments and qualifying factors for Silicon Valley home buyers, the demand will not be as high.

Thirdly, how will stock prices affect Silicon Valley real estate?

  • Stock prices of tech companies will drop.

It’s not a matter of if, but a matter of when.

It doesn’t look like it’s close to happening, but when it does, home prices in Silicon Valley should slow down and may even decline.

Why?

  • Because there will be less buyers.

How have the majority of home buyers been coming up with their down payment?

  • Stock options

The only reason why buyers have been able to do this is because of the increase in their company stock prices.

What happens when the stock price stays flat or drops over a time period of a few years?

  • There is no money to be made.

If you remember:

  • An employee is granted the shares at the stock price of when they’re hired.
  • Then, they have the option to sell them every 12 months for 4 years.
  • If the stock price when the employee goes to sell their shares is less than the stock price of when the shares were granted to them, then there is no profit.

This means the employee doesn’t make any money on their employee options, which means they don’t have a big chunk of change for the down payment.

For example, Apple’s stock price today is at $171.

Let’s say a new employee was hired today and was given employee stock options.

  • If Apple’s stock is on a decline over the next four years, the employee’s shares will not be worth anything.

The stock market has been on a tear over the last few years, but will eventually take a breather and decline.

When?

It could be next year, five years from now, or ten years from now.

But as of today, the economy is doing well and the tech market is strong. All indications point to the idea that a steady decline may not happen for a while.

In my opinion, as long as the tech market is strong, interest rates remain low, and there aren’t any major catastrophes, Silicon Valley real estate should continue to see a shortage of inventory and a high demand from home buyers.

How Does This Impact Buyers and Sellers?

The Silicon Valley real estate market has been on a roller coaster ride that has only continued to progress over the last several years.

For buyers, it’s a very competitive market. How so?

  • They’re going up against plenty of other buyers in the same position that they’re in.
  • One of the concerns that a lot of them tend to ask themselves is if they’re “overpaying,” and whether or not they should wait.

In my opinion, “overpaying” doesn’t exist in real estate.

Why?

  • Because a property is worth what someone is willing to pay for it.

A couple of months ago I sold a house in West San Jose.

  • This home was about 1,350 square feet on a 9,000 lot and needed some work.
  • We listed it for $1,299,000 and it sold for $1,500,000.

Last week, I wrote an offer for buyer clients on a home only a couple streets over from this one.

  • This home was listed at $1,395,000, had the exact same square footage as the one I sold, was on a 8,000 square foot lot, and also needed work.

These two properties were very similar in characteristics, and the home I sold was the best one to compare it to.

So, what happened?

  • My clients ended up offering $1,620,000 without any contingencies.

In my opinion, that’s a very strong offer. But we found out that it wasn’t as strong as we thought.

Why not?

  • The seller ended up receiving 22 offers with almost half of them offering over $1,600,000.

As of now, I don’t know what the final sales price is, but I wouldn’t be surprised if it ends up being close to $1,700,000.

My clients really wanted that home and were disappointed they didn’t get it.

They asked me if they should wait for the real estate market in Silicon Valley to slow down.

But if you’re looking to buy, I’ll tell you the same thing I told them: nobody knows when that’s going to happen.

It could be next month, or it could be ten years from now.

As I previously mentioned, in my opinion, as long a she tech market is strong, then Silicon Valley real estate will also remain strong.

For most people, buying a home in Silicon Valley is a long-term plan, not a short one.

Everyone wants to time the market, but nobody knows what’s going to happen.

I’ve had several clients who put off buying in 2014 and 2015 because they thought the market was at its peak.

They ended up buying in 2016 and 2017, but at much higher prices.

I will never tell someone that they “need” to buy now because prices are going up, or interest rates are increasing.

These things are factors worth considering, but there are also others, such as:

  • Would the new living situation be better than the current one?
  • Are the schools that fall within the boundaries of the new home important
  • Is the neighborhood better?
  • How much will a credit for 1% of the purchase price help the buyer?

If the pros of buying a home outweigh the cons, then you may want to consider moving forward.

But what if you’re thinking of selling?

Silicon Valley has been in a seller’s market for the last few years and it looks like it’s going to remain that way for some time.

For how long, nobody knows.

Selling a home is a big decision and a major transition for most people.

Similar to buying, I always suggest making sure the pros outweigh the cons.

Sure, maybe it makes sense to wait and see if the market goes higher, but what if doesn’t?

I just sold a home in Almaden Valley and my clients originally planned to sell in the latter part of 2018.

  • They’ve lived in the home for almost twenty years and planned on moving out of the area.
  • Their home is worth more now than it has ever been and the equity they are walking away with is a big chunk of their retirement.
  • They decided to sell sooner than originally planned because they didn’t want to get too greedy.
  • They are renting until they leave the Bay Area towards the end of 2018.

Sometimes the decision on when to sell a home is within the seller’s control, but sometimes, it’s not.

Either way, maximizing the returns when selling is almost always a top priority for most homeowners.

For many people, it’s the biggest financial transaction they’ll ever make and walking away with the highest amount for the sale is important.

Having a professional opinion to not only make the selling process less stressful but also having someone by their side and only charging 2-3.5% commission, can be a deciding factor.

Whether buying or selling, I always suggest making sure the pros outweigh the cons when deciding when and if you should move forward.

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What Does Contingent Mean in Real Estate?

Real estate contingencies are important to understand for both buyers and sellers

Understanding the answer to what does contingent mean in real estate is critical whether you’re a buyer or seller. It’s undeniably a pivotal part of the home selling and home buying process.

So, exactly what does a contingent offer mean in real estate? A contingent offer occurs when an offer on a home has been made by a home buyer and has been accepted by the seller, but the contract has certain criteria that must be met to finalize the transaction.

For a contract to be binding, a condition put into the contract needs to be met first. This is also referred to as a contingency.

In this article,  I’m going to outline everything you need to know about contingencies. This includes how real estate contingencies can protect you and how you can use them as leverage when selling or buying your home.

How Many Contingencies Can be in an Offer?

Technically, there can be contingencies of any kind in a real estate transaction. But there are three you’ll be most likely to hear about. These include an inspection contingency, an appraisal contingency, and a financing contingency. These contingencies are standard on the purchase contract in California, and are also common in most other states.

Sometimes, a buyer makes an offer on a home for sale that is contingent on the sale of their current residence. This type of contingency isn’t as common, particularly when market inventory is low and demand for homes is high.

This type of market is known as a seller’s market. It generally means there are more buyers than there are homes for sale. Because of this, buyers need to stay competitive with their offer. This is due to the fact that sellers often will have several offers to choose from. This usually means that a buyer won’t be placing a contingency that would take up more time for the seller. The sale of a buyer’s current residence that is placed as a contingency in an offer is usually more common in a less competitive market.

How do Contingencies Work in Real Estate?

When a buyer is thinking about putting an offer on a home, the first thing they do is their homework. This includes researching nearby recent sales, and requesting to look at all of the seller’s disclosures, reports, and inspections. Most buyers will ask their agent to gather this information. Then, the buyer and their agent will thoroughly go through and do as much research as possible.

When the buyer is ready to put the offer together, they’ll discuss which terms they would like to include. The two biggest ones involve price and the contingency periods. In California, there are standard time frames for the contingencies – but the buyer has the option to reduce the timeframes, or waive them altogether.

When selling your home, you shouldn’t only look for the highest price being offered. You should be looking at the contingency periods as well. Sometimes the highest price isn’t always the best offer.

Here’s an example to illustrate this point. Imagine a scenario in which two prospective buyers have placed an offer on a home. One buyer offered $1,250,000 and waived all of their contingencies. The other buyer offered $1,260,000, but kept their inspection and appraisal contingency.

Real estate contingencies should be considered along with price when evaluating offers from buyers.

Which one would the seller be more inclined to accept? The seller’s agent should be going over the details, including pros and cons in a scenario like this, but this is an example where contingencies in a real estate transaction can influence a seller’s decision on an offer.

Where Escrow Comes In

One of the biggest effects and influences of contingencies in a real estate transaction has to do with the escrow deposit. This is not only the case in California, but also in many other states across the country. When the contract is ratified, the buyer needs to put a deposit in escrow within 72 hours. This is because 72 hours is the default timeframe, but this can be cut down to less time if the contract says so. This deposit is usually 3% of the purchase price and is applied to the buyer’s down payment.

There’s a key piece of information to note if you’re a buyer. In order to have your offer look a little more enticing to the seller, state that you’ll deposit the 3% within 24 hours. If you’re a seller, your agent should be a little aggressive. They may see if they can get the buyer to make the escrow deposit within 24 hours instead of the standard 72.

Once the buyer removes their contingencies, their deposit can be at risk. This means that if the buyer wants to back out of the transaction after releasing their contingencies, then they may be at risk to losing their deposit to the seller.

If the buyer still has contingencies in place, and wants or needs to back out for a specific contingency reason, then they can do so and get their deposit back. You’ll want to confirm what is specifically stated in your contract. Your agent should be able to go over this with you.

Next, let’s break down each of the big three contingencies in real estate that are the most common.

Home Inspection Contingency

The home inspection contingency refers to the timeframe allocated for the buyer to do any and all of their inspections. This includes having their own home, termite, roof, or pool inspector come out to the property. It also includes bringing a contractor out to the home. Any other type of inspection the buyer wants carried out would also fall under this real estate contingency.

When selling a home, the seller needs to disclose as much information about the house as possible. Anything and everything they know, whether good or bad, will need to be detailed in standard disclosure forms.

The seller’s agent will provide these standard disclosure forms to the seller to fill out. These disclosure forms, along with any reports and inspections the seller has done, should be put together by the seller’s listing agent. They should be easily accessible for any buyers and their agents by the time the house goes up for sale. This can be done in several different ways. Some examples include putting a link directly on the MLS that only other agents can access or having a Dropbox or Google Drive link ready to share. They can also be sent via email with attachments.

Along with the disclosures, the seller will need to provide certain reports. The two most common ones in California are the title report, also known as the prelim (short for preliminary title report), and the Natural Hazard disclosure.

Preliminary Title Reports and Natural Hazard Disclosures

The title report is the legal description of the property. It documents who the current owners are, any liens on the property, and encroachments. It also documents easements, the current tax rate and instalments for the current owner, as well as how the current owners are vested.

The natural hazard disclosure is a report that is required in the state of California that the seller must provide. The disclosure will state if the home being sold lies within a hazard area. There are six of them that must be disclosed. They include a special flood hazard area, and dam inundation. They also include very high fore zone, wild land fire, earthquake fault zone, and a seismic hazard. As a side note, if the property does fall within one of these hazard areas, most lenders will require extra insurance that the buyer will need to purchase.

A natural hazard disclosure is a report that is required along with any disclosures that are part of the home inspection contingency.

In addition to providing the required disclosures and reports, the seller has the option to have any inspections done on the property that they’re selling. If you’re a seller, you might be thinking that this is a waste of money. In fact, the opposite is true.

Two Reasons For Getting Inspections Upfront

It’s in your best interest to complete inspections on your home upfront for two reasons. One, if there are any major problems that arise from these inspections you will know about it and decide if you want to tackle it before you put the house up for sale. But the second reason, in my opinion, is the most important. The buyer will have the opportunity to see these inspections before writing their offer. This is huge and can pay off for you in a big way.

If you’re a home buyer and you’re doing your research on a home that you’re interested in, wouldn’t you be a bit more educated on the property and be able to make a more informed decision on your offer because you have this information upfront? Chances are, you would – and most buyers do.

In California and especially in Silicon Valley, home, termite, roof, and pool inspections are the most common. Again, these are optional for the seller, and either way, the buyer will have the option of doing their own inspections once the contract is ratified. But it’s in everyone’s best interest if these are provided upfront.

A Firsthand Example

As a seller, your agent should be able to leverage these inspections and negotiate a better offer. I just sold a house in Almaden Valley, which is an upscale neighborhood in San Jose. My clients were adamant about not doing inspections upfront. They purchased their house in 1985, and said when they bought it, the seller didn’t provide any inspections and that they had to pay for them. Why should they have to conduct inspections for a new owner? I explained how the buyer would most likely include a home inspection contingency in their offer if we didn’t provide one upfront. Eventually, they decided to get a home and termite inspection.

Both reports came back very clean, with only the home inspection having a few minor recommendations. Because we had the inspections upfront, this helped the buyer feel more comfortable in writing the terms of their offer. This also helped me negotiate their offer $100,000 above our asking price without any buyer contingencies. The buyer did all of their homework and decided to use our inspection reports in their decision of waiving their contingencies with their offer.

Needless to say, having these inspections done upfront helped the seller get an offer that they may not have without them. It also helped the buyer get their offer accepted on a home that they really love.

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Appraisal Contingency

An appraisal contingency refers to the time frame the buyer has to not only have their appraisal completed, but more importantly, signed off by their underwriter at their lender.

In a hot market (like the one we’re in now in Silicon Valley), also known as a seller’s market where the supply of homes for sale is very low and buyer demand is very high, it’s not uncommon for a buyer to reduce or even waive their appraisal contingency.

An appraisal contingency usually only applies to buyers who are getting financing. But it can also sometimes be a part of the contract in an all cash transaction. This, however, is not that common.

An appraisal is required by every lender and is a condition on the buyer’s loan, as the house is the collateral for the loan amount the buyer is requesting. The bank wants to make sure that the house is worth what the agreed upon sales price is.

The appraisal contingency is not only important for the buyer, but also for the seller too. If the house does not appraise for the sales price and the buyer has an appraisal contingency in their offer, then three things could happen. One, the buyer can try to renegotiate the price. Two, the buyer can pay the difference. Or three, the buyer can back out of the transaction.

The Importance of Comparables

If you’re a buyer, you want your agent to pull comparables and do their homework. They will want to look at what has recently sold in the area before writing your offer. A good agent will not only pull the comps, but will also make adjustments. This is similar to what an appraiser would do. When comparing the subject property to what has recently sold, some of these comparables might include the condition of the home and the location of the home on the street. Why is the location on the street important? If a home is on a corner, by a stop sign, or on a busy street, the value can be 3-10% less than it otherwise may be. Comparables may also include certain upgrades to the property, as well as proximity to good schools.

You and your agent will also need to take into account the most recent trends in the neighborhood. Is there a very low supply of homes, and are they selling quickly? If so, then you should factor in a small percentage increase in value compared to a home that sold 3-6 months ago. Doing your homework and working with an experienced agent who knows how to make these adjustments can only help you in making a more educated decision on your offer price.

What Happens if the Appraisal is Lower than the Sales Price?

A lender will only use the sales price or the appraised value, whichever is less. A lot of the time, the appraisal will come in at or right around the purchase price. The appraisers get a copy of the purchase contract before they go out to the house. If the value of a home cannot be justified with surrounding comps, then the appraised value may very well be less than the purchase price.

When this happens, the lender will use the appraised value as the amount that they’ll lend on. For example, if the buyer and seller agreed upon a $1,200,000 purchase price and the appraised value comes in at $1,150,000, then the lender will lend on the $1,150,000 – not the $1,200,000. In this scenario, the buyer does not pay the full difference of $50,000. This is a source of confusion for many.

If the buyer planned on putting 20% down on $1,200,000, that means they planned on a $240,000 down payment. If the value from the appraisal comes in at $1,150,000 and this is what the lender is going to lend on, then that means tehy’ll need to pay 20% of $1,150,000 (which is $230,000) plus the difference of $50,000. This means that your down payment would be $280,000. In other words, if the appraisal comes in lower than the purchase price, then the buyer will need to come up with 20% of the appraised value, plus 80% of the difference between the appraised value and purchase price.

What Does This Mean?

If you’re the buyer in this scenario, this means you will now need to put down $280,000, which is $40,000 more than what you anticipated. This is why having a good agent to assist you with justifying your offer price in a seller’s market is important. In many cases, the offers are above the asking price. If you’re waiving your appraisal contingency, (which many buyers do in a hot market), then you want to be sure that there’s a good chance that your offer price can be justified by recent sales and the necessary adjustments.

If you’re a seller and you receive an offer without an appraisal contingency, your listing agent should be doing a lot of vetting on the buyer. They should be doing this anyway, but more so when an offer comes in without an appraisal contingency.

Why Vetting the Buyer is Important

Let’s say you’re selling your home, and you get an offer for $1,500,000. Your agent gets the offer, the signed disclosures and reports, the buyer’s pre-approval letter, and proof of funds for the 20% down payment. In Silicon Valley, submitting these items with an offer are pretty standard. In other parts of California and in other states, it’s not as common.

Now, let’s say you accept the offer. Next, the buyer puts down their escrow deposit and the lender orders the appraisal. But the appraisal comes in at $1,440,000. Does the buyer have enough funds to pay the difference? You and your agent aren’t sure, because your agent didn’t confirm this beforehand.

Your listing agent should always ask the buyer’s agent if the buyer has any more funds. They should also ask what happens in a scenario where the appraisal comes in less than the purchase price. If the buyer only has enough funds for the 20% down payment, then this is something you’ll need to take into consideration when looking at their offer.

Loan Contingency

A loan contingency, also known as a financing contingency, is the time frame the buyer has to make sure they’re getting the loan.

A loan contingency is not the same thing as a pre-approval. When a buyer removes their loan contingency, they’re just about 100% certain that they will have no issues with the loan.

When a buyer receives pre-approval, they usually submit their most recent pay stubs, tax returns from the previous two years, and their most recent bank statements along with their loan application. Depending on who the lender is, the loan officer may issue a pre-approval. In other cases, it will come directly from an underwriter. It’s ideal if the buyer gets the pre-approval after having an underwriter look at their initial loan documents.

The underwriter is the person at your bank who is looking over all of your loan documents. They are the decision maker. A pre-approval will still have outstanding conditions such as the purchase contract, appraisal, and title report, among others. But when the pre-approval comes directly from the underwriter, all parties involved can be a little more confident that the buyer will be able to obtain financing.

What Happens Next?

After the contract is ratified, the first thing the buyer and their agent will want to do is tell the loan officer of the offer’s acceptance. The loan officer will start the loan process right away. First, they will need a copy of the contract, the title report, and the escrow company information.

At this point, the buyer’s loan is conditionally approved. This means the lender is going to approve them, but only after they meet a certain number of conditions. Once they meet all of these conditions, then the lender will draw the loan documents and get them ready for the buyer to sign. This process can take anywhere from 20-30 days.

When the buyer releases their loan contingency, they want to be 100% certain that there will be no issues with the loan. Before a buyer waives their loan contingency, they should have a discussion with their loan officer. They will want to tell them that they’re removing their loan contingency and will also want to make sure that the loan officer gives them the green light.

As a seller, your listing agent should be doing a lot of vetting when you receive an offer. Much like asking for proof of additional funds, the seller’s agent should make a phone call to the loan officer and have brief discussion with them about the buyer’s financing situation. This can give the seller and the listing agent a clearer picture on how just how well qualified the buyer is.

What Does Contingent Mean in Real Estate?

So, how does one sum up the answer to the question “What does contingent mean in real estate?” The biggest takeaway to remember? You shouldn’t count on the transaction being close to complete until the removal of all of the contingencies.

Contingencies in real estate are important for both buyers and sellers to consider.

If you’re a buyer, make sure to do your homework and have contingencies in your offer. This of course could vary depending on what kind of market you’re in. Regardless, I always suggest to my clients that they should have an inspection contingency at the very least. And depending on the situation, I almost always suggest an appraisal contingency as well. In a tumultuous seller’s market, like the one Silicon Valley has been in for some time, often the buyer doesn’t have a choice but to waive all of their contingencies. In a neutral market or a buyer’s market, the opposite is true. Because the number of homes for sale is higher than usual and the demand isn’t as high, home buyers have more leverage.

What You Should Do as a Seller

If you’re a seller, make sure your listing agent is doing a considerable amount of vetting on the buyer and their offer. Make sure they’re calling the loan officer for the buyer before you decide which direction to go with the offer. Also make sure they’re playing through every scenario. For instance, if the appraisal comes in short and there’s no appraisal contingency, can and is the buyer willing to pay out of pocket? Do they have pre-approval from an underwriter? Or did a loan officer issue it?

As a seller, your listing agent’s job is negotiate the best possible terms in the offer you accept. This doesn’t always mean price. Sometimes, an offer with strong contingencies, but lower price compared to another offer can be better. One important thing to remember: don’t celebrate until all contingencies are released from the buyer. In fact, don’t celebrate until your home sale proceeds hit your bank account. Never count on the sale of your home almost being completed until the buyer has released all of their contingencies and the appraisal is completed without any issues.

If you’re thinking of selling your home and live in Silicon Valley, your neighborhood SoldNest agent can sell your home for more and save you thousands. Not only can we help ensure you receive the best possible offer in terms of both price and contingencies, but we also provide better overall service and marketing – and only charge a 4% commission. To see what your home might sell for, we’ll provide you with a thorough market analysis. You can request one here.

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High Demand, Low Inventory in the Bay Area Real Estate Market

Bay Area real estate trends show this to be one of the hottest markets in the country

There are lots of buyers looking for a home in the Bay Area real estate market. In fact, similar to recent real estate market trends across the country, there is no shortage of demand. There is, however, a lack of inventory. Home sales in the United States are at their lowest in terms of supply in seventeen years.  In other words, current trends increasingly show a small number of houses on the market for a large (and growing) population of interested buyers.

The result for the housing market nationwide is that home prices are going up – an effect certainly felt in the Bay Area real estate market as well. With so much demand on such a small number of homes, sellers are in a position of being able to list their home at price points considerably higher than usual.

Nationwide, the median sales prices for homes sits at $232,000. Despite the fact that the number of homes for sale is down by 13% year-over-year, sales growth is up by 8.9% as of last month. This reflects higher sales numbers for a fewer supply of homes throughout the United States. A total of 32 out of 90 metro areas nationwide experienced a double digit increase in sales since last year. This means that more than a third of metro areas in the U.S. saw their home prices increase dramatically.

The effects of high demand and low inventory

The increased demand and higher sales prices makes it more difficult for first time buyers to get into the market. By the end of December 2016, first time buyers represented just 32% of the market. This is noticeably below the 40% share that realtors and economists note as a benchmark for a healthy real estate market.

In 2016, a total of 37% of homes that sold were purchased by buyers who did not live in them. Instead, they were purchased by people with the intention of being rented out. What this means is that more people are becoming renters instead of buyers, and often not by choice. As of last summer, the home ownership rate in the United States was the lowest it has been in more than 50 years. The price of homes is increasing faster than incomes are rising.

The hottest real estate markets in the country include Denver, Seattle, and of course, the Bay Area market.

The Bay Area real estate market

In many parts of the Bay Area real estate market, prices stabilized somewhat from August 2016 through to the end of the year. Come January, however, prices began to increase. The high demand for a low supply of properties has not let up since.

Last month, the majority of buyers in the Bay Area real estate market paid over asking price for their home. In San Jose, 69.6% of homes went above asking, and home sales in general went up. Over in San Francisco, 66.7% of homes went above asking, and in Oakland, that number came out to 65.9%. Meanwhile, in San Jose, a -25.9% decrease of homes for sale year-over-year occurred.

According to the National Association of Realtors, the average qualifying income to be eligible for home ownership is $42,962. This corresponds to the national median home price of $232,200. But in San Jose, the median home cost is $1,00,500. This makes the qualifying salary to buy in the area $183,730. In fact, a news report this week stated that the Bay Area is now so expensive that even some six figure salaries are now supposedly “low income.” According to the U.S. department of Housing and Urban Development, a household income of $105,350 is now “low” for families of four living in San Francisco or San Mateo counties.

North of San Francisco

North of San Francisco in Marin county, the median listing price for homes as of March 31 this year hit $1,249,000. Home values in Marin county have increased by 7.5% in the past year. They are likely going to continue to rise. In fact, the median list price per square foot of homes that are on the market in Marin county is $640. Recent Bay Area real estate trends show that this is higher than the average for the metropolitan area of San Francisco. The average in San Francisco sits at $495 per square foot.

Meanwhile, Napa is ranked the seventh least affordable US housing market in March of this year. And experts say that going forward they expect Napa home prices to increase to their highest levels in eight years. The California Association of Realtors reports that the median home price for the area is $606,494.

Santa Clara County

In Santa Clara County, particularly the South Bay, there have been some interesting trends across its real estate sales. This past quarter, there were fewer properties for sale in Cambrian than there have been during Q1 of previous years. In Campbell, as is often the case in many Bay Area real estate trends, sales price records continue to be broken. Last year the Campbell real estate market saw the highest ever sold price for single-family residences. That alone is noteworthy. But during the first quarter of 2017, that record was broken by almost $100,000. This set a new benchmark for home prices in this part of the Bay Area real estate market.

Fewer days on the market

Over in Willow Glen, real estate trends indicate that there has been a significant decrease in the number of days on the market during the last quarter for condos and townhomes. In January, an average of 42 days on the market was typical for these types of properties. By the end of the quarter, 14 days became the average amount of time on the market.

Other areas, including Blossom Valley, Cupertino, Evergreen, Mountain View and Saratoga, to name a few, have also seen fewer days on the market recently in comparison to before. The only exception to the rule is Los Gatos. Properties there averaged about 46 days on the market in the last 30 days. This is a 9.5% increase in days on the market compared to the 46 day average seen in the last 180 days.

Bay Area real estate market trends

As far as Bay Area real estate trends go, Blossom Valley saw the most dramatic drop in the number of days on the market recently. Over the last 180 days, a typical amount of time for a home in Blossom Valley to be on the market was 27 days. In the last 30 days though, this number was reduced by a whopping 51.9% – to just 13 days on the market.

Cupertino and Sunnyvale have seen the fewest number of days on the market over the past 30 days. For both these areas in the South Bay, homes are currently averaging just 9 days on the market. For Cupertino in particular, this is an especially noteworthy drop in comparison with the past 180 days. The average number of days on the market then was 17 – over a week more, and 47.1% higher than the current average.

Why is this happening?

Why is this happening all of a sudden in the Bay Area real estate market? With economists predicting that the Federal Reserve will increase interest rates a total of three times this year at a minimum, the high demand resulting in fewer days on the market could be a result of buyers wanting to lock in on a property quickly before interest rates rise. Once the Federal Reserve increases its interest rates, this can have an indirect but still noteworthy impact on mortgages for homeowners.

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A recent sale in Almaden Valley

In Almaden Valley, a recent sale by SoldNest breaks a new record in the area. Sitting in the desirable Almaden Valley Springs neighborhood, 1098 Foxhurst Way was originally listed at $1,549,000. In less than a week, an offer for $1,650,000 came through, with no contingencies. The seller accepted, breaking a record in the process and saving $33,000 by selling with SoldNest. Previously, the highest home sold on the street went for $1,600,000, and was 700 square feet larger. This recent sale breaks the record for the highest price per square foot in the Almaden Valley Spring neighborhood. It exemplifies yet again the low supply of homes and increasingly high demand in the area.

Even with a high demand, marketing your property to its highest potential is still pivotal. For 1098 Foxhurst Way, we created a custom video and narrowed in on relevant and effective digital marketing tactics. The right marketing and ability to target the buyer most likely to invest in a property like yours are key.

If you’re thinking of selling your home in the Bay Area, SoldNest can help. We have the expertise and the resources essential to creating the best possible selling price for your property, and you’ll save thousands. Demand is high and inventory is low, so many would argue that it’s a seller’s market. Despite this, it is still important to be able to optimize the marketing and final sale of your home. SoldNest can do this for just 1.5% of the listing fee.