Solano Real Estate Scene: Hearts can be broken when buying a home
I cannot write about a personal experience because I have never been heartbroken over a house, but I have seen hundreds if not a thousand people since 1988 write offers to purchase a home and not get their offer accepted.
In most cases the buyer just moves on to another home and my experience with this is that pretty much every time my client ends up with something better or at least as nice.
In some cases, the offer amount is just too low for the seller to accept and below the asking price. In other cases, and these are the painful ones in which privately there may be some crying going on behind the scenes or at least frustration and mild sadness, the buyer’s offer is rejected for another offer or the offer is written at 8 p.m. and by 9 p.m. the listing is updated in the system to sold or pending.
Earlier this year I witnessed many listings that received multiple offers, and in one case I think there were 10 offers on the place. Nine people lost, and one person won and paid something like $75,000 over the asking price and probably $75,000 over the appraised value, which is easy to do when you have 40 percent down or all cash.
When making a huge down payment or paying cash the appraisal is not a big deal for a motivated buyer because if you put 40 percent down you can easily pay up to 20 percent over appraised value and have no PMI insurance.
Rarely around here does a buyer pay 20 percent over appraised value, but I have seen it done by wealthy, very sophisticated buyers that understand that an appraisal is an opinion of value based on three recent sold comps within a 1- to a maximum of 5-mile radius. If the home they are buying is special and everything they ever wanted in their final home, there may be no comps like the subject property, making it very difficult to appraise.
Great news folks, the market has improved and there are more homes for sale today, making the number of buyers versus sellers more balanced. I wouldn’t call it a buyer’s market, but for average homes we are seeing our borrowers successfully getting their offers accepted.
I don’t have the local numbers handy but, in the Chronicle this past Sunday, the number of active listings in the Oakland market is up 21 percent, San Francisco up 8 percent and San Jose up 49 percent in August 2018 from August 2017.
Now may be the time to sell your starter home and move up to your dream home.