The market for homes under $400,000 is hot in many places in California. And knowing what to offer is tough. Especially with the multiple offer competition that is being encouraged by all sellers, including bank owned properties, flips and short sellers who intentionally price their home low. In multiple offer situations, it is most likely the property will sell for more than the asking price. For example, a home priced at $325,000 in a multiple offer situation could easily sell for as much at $360,000.
The most significant information is the sale price of comparable listings that sold within the last 90 days. A good way to find out about value is to attending public open houses in the neighborhoods where you would like to live. While the Internet is full of great information on values, those sites never actually sold a home. That’s why your best resource, an agent who’s knowledgeable about the current market and prices and trends, is an indispensable help.
It takes a lot of time and is stressful to make offers over and over – especially with no results to show for your efforts. I know of clients who have looked for 6 months (or more), and have made 10 or more offers who simply got discouraged with the process and gave up. You must be realistic about what you can afford and if what you want is even available in your desired neighborhoods. In this upward moving price market, it is self defeating to look for properties up to $300,000 (for example), when what you can really afford is $250,000. In fact, if you can afford only $250,000, you probably should not even look at properties that are asking more than $225,000. This helps keep expectations in line with the market, and I guarantee you’ll be thankful for the budget later.
Cash, clean credit often get the sale
Sellers are looking for reassurance that a transaction will close. They are looking for buyers who are pre approved (by their lender) with a clean offer and as much cash as possible at or above the asking price. With inventories low and first time buyers and investors plentiful, the low end housing market is truly a seller’s market.
All cash buyers get the first look from sellers, especially bank owned properties that have been foreclosed. Next, they look at the highest down payments and what the nature of the financing is. If it is FHA, your offer might not even be considered if the property needs repairs that the seller is not willing to do. In the case of flips where the property has not been owned by the investor for 90 days, they will not even consider FHA offers. A seller might accept an offer that is much lower than yours if that offer is all cash. And if the seller has any fear that the home will not appraise for the price it sells for, then the seller might ask you to remove any appraisal contingencies from your contract. This can endanger your earnest money deposit. All cash buyers usually do not ask for or care about an appraisal and sellers know this works in their favor.
Author Resource:
Beth Robertson obtained her real estate salesperson’s license in 1970 and broker’s license in 1991. Stay on top of housing trends with up-to-date statistics on Sonoma County real estate - http://www.bethrobertson.com
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