Category Archives: savvy real estate buyers and sellers

Why working with a local real estate agent is beneficial for you

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Clients want to served by an agent who knows their service areas well. Let’s talk about why hiring a local real estate agent is useful in the home buying or selling process.

Local agents tend to have a firmer grip on prices than out of town agent counterparts. When presented with the sales data, they can look beyond data to see microtrends within the service area that could aid the client in the offer. Sometimes this insight can be called a qualitative analysis of pricing where local agents see property data but can intuit where pricing is headed in a few months. Communicating this information to clients in a timely manner could save them more money or get more money.

What does ‘local’ even mean? Agents could live in your service area, have an office in your service area, or have a track record in your service area. They don’t need all of them, but imagine finding an agent who was born and raised in your service area. They could provide huge neighborhood insights that other agents might not know.

If they were born and raised in your service area, that condition alone won’t guarantee you’ll have a good experience, but it’s a helpful consideration to take among many factors about whether your local real estate agent will do an exceptional job for you.

When I happen to assist clients who are looking in my service area, I make it to point to tell them I was born and raised in that area and that my knowledge of the area and neighborhoods could help them win offers or sell their house. Knowing the amenities, foot traffic, walking scores, schools, parks, and other details allows them to have a more informed picture of what they are doing.

Sometimes agents serve areas where they do not live. Sometimes their service area is too expensive for them to live in and they have to come from out of town to service it. They could still be experts for the service area, but they should disclose they are coming from out of town to meet you there. In fact, in the listing agreement, there is a place that tells the client whether or not the agent is in the service area for the MLS or not. This industry transparency helps clients get connected to agents who they feel are right for the job.

Why Looking at online real estate without being qualified is hurting your financial progress.

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We’ve all done it. We look at real estate online and share it with friends, make comments about how bad the carpet looks or how expensive it is. We joke that there’s jumpscares in the drab living room and the walls are yellowed and peeling. It’s a hobby for some. Unlicensed casual real estate agent, they would dub themselves. I’m here to explain that if you are en route to buying a house, that this practice could hinder your financial progress to making your first real estate purchase.

Let’s clear the air first. People do this for leisure with no intention of purchasing a house, ever, because it’s fun. I’m not addressing them. I’m addressing the people who intend to buy a house but they have not spent the time to sit (well… it’s virtual now) down with a Mortgage Loan Originator to get the proper qualifications. Looking at homes you are not qualified for may be interesting from a research standpoint, but is only postponing your actual purchase.

Here is the deal: looking at houses is actually a very draining activity. There’s lots of details, pictures, disclosures, etc. Some clients drive out of town every weekend to see houses and they come back exhausted. Try looking at 5 homes 80 miles away using both weekends for 5 weeks straight– you are going to feel the burn out.

When you look at properties online, you are subjected to a lot of data, and you only have a finite amount of time to actually process this data. If you intend to buy a house and you’re looking in your area, there’s no telling if you qualify for this house or not until you get the pre-approval letter from the lender.

I’ve insulted people when I claim they are looking at houses they cannot afford. It’s an intrinsic sense of pride to look at things you can afford. They tell me they know they can afford it without needing the qualified letter, because they have means. While this may be true, expressing an interest in a house you want to buy without being qualified makes you behind all the buyers who already got qualified. There’s offer deadlines. Lots of competition. You need to step up and play the game and get qualified. Why give yourself a delayed start in the race?

Getting qualified for a loan or making your cash liquid for purchase tells sellers you are serious in purchasing a house. It also tells you what price you should be looking in. Given your time is finite, looking at homes casually drains the energy required to actually look for houses you can afford. It’s OK to look at castles for sale but think of yourself and plan ahead if you are serious about buying real estate.

Are Real Estate Sales Truly Slower During the Holidays?

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You must have heard it at least once. That real estate is slower during the holidays. It’s an anecdotal statement. But as a real estate professional who has seen decades of transactions, let me give you my anecdotal account.

I have worked on holidays– Christmas, New Years, etc. When people have to move, they have to move. Job relocations, death in the family, etc. These things prompt action. And these events do not wait patiently for important holidays to pass. When these things occur, there will most certainly be real estate sales during the holiday.

While buyers are often still in the dark about the seller’s reasons for selling, some of the reasons for selling could be urgent. If buyers are patient enough, they might be able to have less competition when sending offers.

Sellers will use everything in their power to make the listing sell quickly at the highest price– order pre-inspections, pre sale escrow, make repairs, stage the home. They have tools to convert buyers with the help of their Realtor. With enough activity on a listing, it does not matter if the holiday is happening or not.

A holiday is a break of sorts, just like summer. Sometimes persons uses this opportunity to make life transitions while they have these breaks because they are too busy at work to do it any other time. When school is out, parents my find an opportunity to move and purchase before kids start again.

For people who have full control over their buying and selling activities, looking during the holiday appears as an opportunity, but not always. I have seen both quiet and highly active buying and selling periods during the holiday, so I always tell my clients to keep their expectations in check.

How to Cope with the Lack of Housing Affordability of the Bay Area

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People are leaving the bay area and it’s depressing. They leave to find more affordable rent or more affordable housing with smaller mortgage payments. Seeing them go is sad. Yes, we can keep in touch. We can teleconference. We can videochat. We can be penpals. But the ability to plan in person hangouts with them is gone, or just more sparse.

There are some affordable routes to homeownership– I wanted to talk about them. They fall into the category of starter homes. They often pertain to condo living, mobile home living, or manufactured home living that lets people stay in the bay area and save up for larger purchases.

One example that can be found in Alameda, Santa Clara, and San Mateo county is the $400,000 1 bedroom condo. I see them practically everywhere. What does it take to purchase? Well, first understand that the loan rates are at historic lows. This means you will need anywhere from 5%-20% down plus about $10,000 of closing costs. If you can save that in 1-2 years you can stay in the bay area and make the purchase. Why are there so many available? There may be a high turnover rate for them because others have saved money to buy more property. People may be tired of paying HOA payments and finally saved up for a single family home. Investors may have earned enough to purchase more investment property and they need to 1031 exchange the existing property. Just because there’s a lot of inventory in this price range does not mean it is undesirable.

If you need something even more economical, let’s talk about mobile homes. Mobile homes are module-style homes that sit on rented land for which you pay a monthly space rent. The sum of your space rent and mortgage could still be smaller than paying rent. Not only that, but because it is an investment, you can sell it later down the line, making it superior to renting. These purchases are often sub $300,000 even in high cost areas like San Jose. The one thing I would caution is that sometimes mobile homes do not appreciate as fast as single family homes, so do not expect a huge boost of equity. With a lower purchase price and lower dollar per square foot cost, you could have spacious living areas at a fraction of the price.

What do you do after purchasing these places? The hope is to save for larger purchases. By selling your starter place, you can step up to your next purchase.

Are you a tire kicker or a home buyer?

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Are you a tire kicker or a home buyer?

In the advent of a more transparent real estate market, where listings are found all over the internet, it is sometimes thought of by persons that browsing a few listings on their phone makes them a home buyer, without much consideration to their qualifications. You might call these people “tire kickers”. What I want to do in this article is distinguish between a tire kicker and a home buyer, and give advice on how you can be in the latter camp.

Tire kickers are often those people who might browse around and window shop without any intention to buy. Tire kickers exist in a retail environment where persons are encouraged to look around to decide to buy or not. Tire kicking may not be a bad thing. In fact, those who enter stores and don’t buy anything might return to buy at a future date, or by word of mouth, recommend the store to somebody else.

Let me know talk about online tire kickers. Online tire kickers might have the quality of browsing for goods online and even adding something to their shopping carts and never check out and pay for anything. They might flirt with the idea of owning something and add it to a cart or wish list, but never pay. Back end engineers often spend lots of time wondering how they can convert these tire kickers into real buyers. Ergo, much time is spent programming guest registration and check out instructions to make sure these people can seamlessly enter credit card information for a purchase.

So far, we have seen that tire kickers have some vague interest in owning something but may not follow through with it. At this point, we could venture into the philosophic question of rational choice theory, but we might bracket that conversation for a later time and just focus on the “what” instead of the “why”.

Let us know jump back to owning a home in real estate. Owning a home in real estate is a serious step in one’s life and, often, such a decision is not possible without evaluating one’s life circumstances. If the life circumstances are right and buying a home is part of that master plan, then that is often the first step in converting a person from a tire kicker to a home buyer.

The next step to converting a tire kicker to a home buyer is by loan/ bank qualification. Homebuyers need to speak to a loan agent or present their bank statement to their real estate agent to show they have the means to make a purchase.

There’s no nice way to say it, but if you have not researched the means to purchase a home, you are not a homebuyer! People sometimes forget that homes require money to purchase. This money will either come from your personal bank account, a gift from a family member or friend, or from a banking institution who will lend you the money, less the down payment and closing cost fees.

Once you have identified your home buying qualifications, which alludes to your purchasing power, then you can meet with your Realtor to find out just exactly how much “house” you qualify for. This is when returning to the phone and the desktop might be relevant to look for houses. Your pricing parameter is clearer and your home search is more concrete. Not only will you have more confidence in home buying, but you are more likely to succeed in purchasing a house than those who do not get qualified first.

I hope I have outlined the steps to convert yourself from a tire kicker to a home buyer, which in summary is to identify whether your life circumstances demand and tolerate a purchase for a home, and then produce a loan qualification letter that states an official banking institution has given you the OK to make the purchase. I think one reason I wrote this article is because I speak to hundreds of buyers daily on purchasing a house, and many of them are casually looking without much of a plan, and this is frustrating for them since they expect to buy a house just because they can look it up online, and frustrating for me because it is not a good use of time. What I can say is that tire kickers might also specify a time in the future where they might be thinking of buying, and that might be another talking point for the future. Buying a home depends heavily on the readiness of the buyer/consumer, and I am not one to rush anyone into a complex process, but homebuyers are not homebuyers until they are qualified!

Why We like Working with Savvy Real Estate Buyers and Sellers

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Some real estate agents are terrified by the thought that their clients have researched an area as much as they have. This puts real estate agents in less of a position of power and that is somewhat threatening, or so they say. However, my question is this: were agents ever in a position of power to begin with in the first place? The answer to this is ‘no’. Agents are fiduciaries for their clients, or principals, and it is an agent’s duty to represent the interests of the client in the highest regard. And buyers want to pay only as much as they need to to get the house, while sellers want as many offers as possible at the best price and terms. A Realtor gets the client in this position whether the client is savvy or not. But if the client is savvy, then we love it! Let us first discuss what it means to be a savvy client of real estate.

When buyers start their process on the internet, it’s no surprise that they view listings casually, or with a specific purpose in mind. Instead of streaming their favorite Netflix show (mine is Orange is the New Black, by the way), they may instead decide to go on real estate websites to see what the latest inventory is out there in their target market. Savvy real estate buyers and sellers already have a strong familiarity with their market from online data that is readily available for everyone to see.

Savvy real estate buyers and sellers often ask very detailed questions about the neighborhood and can go through large amounts of listings in a short period of time. This means the consumer is well-informed. And we find this to be a good thing. When a consumer is informed, it takes less time for us to convince a buyer or seller that they must offer or sell at a certain price. If a buyer wants to low-ball a property and we tell them there are 10 offers to the property, a savvy buyer will know to increase the price in order to get the offer accepted. Sellers wanting too high a price will know right away with our advice that the price might be too high, and we would do this by corroborating our opinion with the data the seller views for herself on other websites. I think when all parties are informed in this manner, decisions can be made more efficiently.

Some people think that to service a client, that the Realtor needs to be an order giver and the client an order taker, but this is not the case at all. As real estate agents, we are, legally, special agents with limited powers to bind the principal to contracts. In layman’s terms, this means that the client is 100% the decision maker in all aspects of real estate. So when we work with savvy buyers and sellers of real estate, and these clients of ours end up making the final decisions for themselves with our guidance, do you think we want them informed or not so informed? The former wins over the latter every time.

What if a client is a first time home buyer and does not know much of the real estate market? That is perfectly fine– it is our duty to fill in the gap and inform our clients to make the best decisions they can. After our preliminary advice to our clients, our clients’ understanding of the market improves, and over time, less needs to be explained to them (less explanation does not constitute less disclosing, please keep this very distinction in mind). Either way, we are always excited to help our wide range of clients, whether they be savvy or buying or selling for their first time. While Realtors are still the real estate experts, we recognize the thoughtfulness and knowledge our clients have picked up along the way and we think it’s great that our clients are doing their homework.