Question Details

ally, Home Buyer in San Francisco, CA

buyer's market? It doesn't feel like it.

Asked by ally, San Francisco, CA Wed Mar 12, 2008

We've been looking for a home to purchase since November. We have put in offers on 3 houses since then, and just have not had luck getting into contract even though 2 of our offers were for above asking price. It sure isn't feeling like a "buyer's market"

Any tips on what to do to make your offer more attractive. We are essentially pre-qualified buyers, 20% down, close in 30 days, only contigencies are for inspection, appraisal, and loan. We have also been offering $50K over asking price, but still no luck. We also want don't want ot get into a situation where everyone is just bidding up the house. Would 30% down make our offer more attractive? Doesn't the seller get the same amount in the end whether we put 20% down or 30% down?

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16
Hi Ally,
Let me start by saying that contray to National media news, there are areas that are not experiencing a down market. Here in Nevada for example the homes in Incline Village ( Lake Tahoe), values of homes are holding level and even appriciating a little. You may be looking in an area that is experiencing the same.

Are you working with an agent? If so, he/she should be able to give you that information. If your not, you should get one. They will be able to help you more and tell you what the market is like in the area of SF you are looking.

Your offers sound solid and putting more down shoulldn't make much of a difference. Your "Earnest money deposit" size can possibly show a seller your seriousness. You say you are "essentially pre-qualified". What does that mean? I am "essentially" a millionare ... I just lack the money :-) Go to a lender and get pre-approved. Then along with your offer, give them a "letter of commitment" from the lender for only the amount you are offering. This shows the seller that you are a ready, willing and able buyer.

Don't give up! There is a home out there for you and when it right you will get it!

Good Luck!
1 vote Thank Flag Link Wed Mar 12, 2008
Wow. This sounds pretty depressing. It seems like there is a lot on the market right now for sale. I am surprised you are having such a hard time finding a house in LAmorinda or WC.
0 votes Thank Flag Link Thu Mar 27, 2008
Apparently, there are lots of buyers like us who have been waiting all winter for the new listings to come up in the neighborhoods where we are looking, ready to pounce if something good gets listed. We are looking in the $1-$1.5M range. That being said, there are lots of houses that are listed in the $1-$1.2M range that should be $700K-$1M range, and those are the ones sitting on the market. We're going house hunting again this weekend.
0 votes Thank Flag Link Tue Mar 18, 2008
Ally,
This does not sound right. You sound like an ideal client. We don't do work in SF area, however I'd like to help you as much as I can. Number (1), the amount down such not make that much difference. You are correct, in the end they receive all their money. Make the closing date as soon as possible and this is more important. (2) How much are you sending? I find it very hard to believe that you are having this much trouble.
The Schaffer Realty Group
Marian Schaffer
http://www.marianschafferrealty.com
877-886-8388
0 votes Thank Flag Link Thu Mar 13, 2008
Good Morning Ally,

A couple of things came to mind as I was reading your question. First, make sure your Buyers Agent is doing a market analysis on each property, prior to you submitting the offer. Knowing your subject property is key to closing the deal. Getting as much information as you can is critical. Know all the players to the transaction. Who owns it? How much did they purchase it for? How much do they currently owe? etc... Your agent will be able to find out all of this information in pretty short order. Once you know all this info you can submit your best offer and you can also have your Realtor put a clause in stating that you will beat any other offer on the table by going up another 5-10k, but they have to show you the other offer and they have to accept your terms within 24 hours. Also, in this state we can meet with the sellers, with the agents approval and go over the offer directly with the seller, this is a great way to do things as your Buyers Agent can really sell you to the sellers and answer any questions the sellers may have, with your consent. In a heated market, a seller will base their decision on which Agent they liked the best and felt confidant in that Agents ability to close the deal smoothly. As for an earnest deposit, the more you put down the more you risk, and what makes it desireable for the seller is should you default on the terms of the agreement, their leverage is your earnest money. The whole contract is what is appealing, not just your earnest deposit. Good Luck!
Web Reference: http://www.kathysnyder.com
0 votes Thank Flag Link Thu Mar 13, 2008
Ally, If you put more earnest deposit down, you will show the seller that you are very serious in purchasing your home and you will stand out above the rest of the offers. A client of mine in the past put their entire 20% down payment as earnest deposit. We were very aggressive in our offer and I put zero days for loan contingency and 7 days for all other contingencies. It was a multiple offer situation and she won. I also closed the transaction in 21 days.
0 votes Thank Flag Link Thu Mar 13, 2008
Yes, I have an agent. Now we've also added a strategy to meet up after I get off work to see any interesting new listings seen during Tuesdays' Broker's Open house. So far, we been going to see houses 2-3 days after they are listed. We've learned that if we like a house, our strategy will be to put in an offer over asking ASAP. Having been beaten by a day or 2 a couple of times now on homes listed for less than a week, we've instituted this new strategy. We also drive around the neighborhoods that we are interested in looking for "coming soon" signs so that our Realtor can get info even before the home is listed.

The questions subsequent to my initial post are just responses questioning some of the advice that Realtors posted in reply. I am not completely lost and confused. Sorry if I give that impression. Your replies are just confusing me. I know what the conditions of our offers are clearly, and Its a good thing my Realtor is taking care of all the details. I am just frustrated with the process of buying a house. With the last 3 homes we owned, we never had such a hard time with the purchase. We've struck out 3 times in 3 different neighborhoods with what were considered strong offers. None of these homes have closed, so for all I know, the buyers who are in escrow probably offered $300,000 over asking and are paying cash. If that's the case, then all the power to them. I don't know many people who are in that position, and if they are, why would they be looking at the same houses I am looking at. The other thing is that I am sick and tired of family and coworkers telling me how lucky I am that I am buying now because it is a buyers market. "you should be able to get a nice house for cheap. what is taking you so long?"

I was just questioning the advice that another realtor just gave me on this forum to put 10% earnest money down. Just didn't sound right. My Realtor didn't suggest that. One of you on Trulia, Cheryl, did.
0 votes Thank Flag Link Thu Mar 13, 2008
Yes, for the most recent offer, we removed our Section 1 termite/pest.
Our only contigencies are a period to get our inspections done, get an appraisal, and a loan contigency.
The first 2 houses already had inspection reports done before the place was listed. The last one had no reports, yet.

Why get inspections if we won't ask for repairs? Our thinking is that we need to know what we are buying. If there is something structurally wrong with the house... and we have seen some where over $200K of work on the foundation was recommended, you need to know what you are getting into, or get out of it if there are too many issues.
0 votes Thank Flag Link Thu Mar 13, 2008
"If I make my contingency period, say 10 days, and currently, my offer has already been in 4 days without an answer back, does that mean that if they get back to me tomorrow, I only have 5 days left to get all my inspections and appraisals done to remove contingencies? "

No, as mentioned earlier shorten the offer expiration period. Make it 24 hours. Its at the top of page 8 section 31. Your contingency period will start from acceptance meaning the date they sign the offer or final counter offer.

California is a consumer rights protection state. More money in escrow means nothings once it goes over 3% of the pruchase price. You will be hard pressed to find a judge in this state to make a buyer forfiet more than that even if the buyer is totally at fault. If the Seller thinks they are going to make a grab form more than 3% they are eith getting bad advise or just mis-informed. Show the bank statments to prove your strength, butplease keep in mind if the seller thinks your loaded, you will lose strength in your negotiations over repairs and other things that can arise in escrow. They will figure you have plenty of money to deal with it.


"Also, is it wise to put over $100,000 down as earnest money? How many would advise your clients to do that?"

California is a consumer rights protection state. More money in escrow means nothings once it goes over 3% of the pruchase price. You will be hard pressed to find a judge in this state to make a buyer forfiet more than that even if the buyer is totally at fault. If the Seller thinks they are going to make a grab form more than 3% they are eith getting bad advise or just mis-informed. Show the bank statments to prove your strength, butplease keep in mind if the seller thinks your loaded, you will lose strength in your negotiations over repairs and other things that can arise in escrow. They will figure you have plenty of money to deal with it.

I would not adive putting more than 3%. you still need two signatures to cancel an escrow and if the sellers refuse to sign then you will need to go to arbitration or court force the sellers to preform.

Do you have an agent?
0 votes Thank Flag Link Thu Mar 13, 2008
To add to what Cheryl posted. The liquidated damages clause (page 5 section 16 of the Purchase agreement) will limit your exposure to 3% (if you initial it). So you can put in 3% and show a bank statement with the 17% difference. Just make sure to transfer your money from that account to only show a total of 20% between your bank account and the 3% in escrow. This way if you have negotiation on repairs or something else, the Sellers will not know your reserves.

Another thing you can do instead of offering more money is to not require termite inspection or repairs (if you are comfortable with taking on this future burden if wood destryoing organisms are found). To do this make sure that your agent does not include the WPA or check off any boxes under section 4.A on page 2 of your purchase agreement.

BTW, If your agent is not working on these refinements, you might want to find a new agent.
0 votes Thank Flag Link Thu Mar 13, 2008
If I make my contingency period, say 10 days, and currently, my offer has already been in 4 days without an answer back, does that mean that if they get back to me tomorrow, I only have 5 days left to get all my inspections and appraisals done to remove contingencies?

Also, is it wise to put over $100,000 down as earnest money? How many would advise your clients to do that?
0 votes Thank Flag Link Thu Mar 13, 2008
Make your contingency periods 10-12 days and why not put more deposit down? Instead of 3% why not put 10% down up front? Some areas in the bay area are not a buyers market. and it appears that way in the area you are trying to purchase. Good luck.
0 votes Thank Flag Link Wed Mar 12, 2008
There is nothing wrong with your strategy. Try shortening their response time (i.e. make the offer in the morning and them having to answer in the afternoon or even within a couple of hours). Don't give them 24 hrs to think about it or receive another offer. Your Realtor should be able to get basic info from the other agent like we had a higher offer, it was a cash deal, etc. If nothing else ... after the property closes he should be able to find what the sold price was through the MLS (at least we can with our MLS). Maybe it IS taking the 100K to get the deal.
0 votes Thank Flag Link Wed Mar 12, 2008
Sorry, I meant we are pre-approved. We have the letter of commitment from the lender each time we submit an offer. Fortunately, we met with our mortgage broker 6 months ago and have been feeding her updated information each month.
0 votes Thank Flag Link Wed Mar 12, 2008
Shorten up your escrow to 21 days and 10 days for inspections and appraisal. Make sure you are working with a lender that can get things done fast. Open escrow with 3%.
0 votes Thank Flag Link Wed Mar 12, 2008
I see so many buyers on Trulia who have low credit score and need 100% financing be able to buy a house.

I think I am a strong buyer. What is wrong with my buying strategy? (ie- offering $50K over asking, 20% down, pre-qualified with excellent credit and stable job, 30 day close, minimal contigencies) Also, we are cautious. We want to buy, but I am weary of offering $100K or $200K over asking. Am I just having bad luck, or are we doing something wrong? Our Realtor assures us that we are going in with a very clean and strong offer each time, but for some reason, it is never strong enough. We never get to see what the offer was that was chosen by the seller, so we don't even get to learn from the process. What makes a strong and successful offer?
0 votes Thank Flag Link Wed Mar 12, 2008
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