Silicon Valley Market Heats Up: House-Hunting Tips for Everywhere
HousingWatch has a hunch that house-hunting tips that apply to California's Silicon Valley, one of the most rollicking, high-stakes housing markets in the country, should work in other, slowly awakening real estate markets. With that in mind, we spoke with a few Silicon Valley real estate professionals to get some ideas of what is important to keep in mind when getting ready to buy your next home:
Do Your Homework
Nearly half of the homes sold in Santa Clara County, Calif., in May sold for more than their asking prices, according to a San Jose Mercury News story. Homes priced the lowest and in the best condition in a neighborhood are most likely to get multiple bids, according to Realtors. Bank-owned foreclosed homes are also getting many bids.
Scott Bruno, a Silicon Valley Realtor since 2005, told HousingWatch that he's seeing more competition in the lower end of the housing market, under $500,000. "The competition is fierce," said Bruno, adding there are almost 20 to 50 offers on bank-owned homes because they're priced so far below market value and comparable homes.
"You need to do your homework. You need to know the real value of it," he says of foreclosures.
In Campbell, Calif., where property values are driven by quality of schools, Realtor Dianne Chandler of Alain Pinel Realtors in Los Gatos says that she recently had 10 offers in two days for a home she listed for $425,000. The 1,400-square-foot home with three bedrooms and two bathrooms sold for $460,000. Chandler also said that she had six offers in two days for a Cupertino condo listed for $450,000 and sold it for $460,000. However, homes listed for $2 million and more aren't getting many multiple bids, she says.
Get Your Credit in Order
Much more documentation is required by lenders to get a loan now than three years ago. Tax records are verified with the IRS, and other checks are made, such as on employment and credit.
"The days of the stated income and all that have pretty much gone away, for good reason," Bruno says. Instead of taking 30 days to close a loan, 45 days is now common, he says.
Bruno said he warns his buyers not to use their credit cards in the 45 days or so before closing, because mortgage lenders can do last-minute credit checks and pull the loan on the day before closing. He said he's seen people buy a washer and dryer set ahead of moving in, only to have it kill their credit score and mess up their debt ratio and cause the home loan to fall through.
Pursue Short Sales With Caution
Buying a home from a seller who owes more to the bank than the home is worth takes more time, from six weeks to six months, because different banks have different policies on what they will accept, says Dale Warfel, a San Jose real estate agent who specializes in short sales.
Half of the market in Silicon Valley is short sales, whereas two years ago it was very rare to have one, adds Scott Bruno
Delays can come because sellers have a second mortgage and need a second approval, there are liens against the property for unpaid property taxes, and slow responses from banks.
Beware Low Appraisals
New rules on how housing appraisals are done have made it more difficult to get high ones, Bruno says. Instead of buyers' agents contacting the appraisers, lenders are in charge and the appraisals can come in lower than the buyer's offer. That can make it difficult to get the loan, and can require extra cash to make the deal, or re-negotiating with the seller.
High-Tech House-Hunting Tools Help
While it isn't unique to Silicon Valley, high-tech methods for finding a home are expected in the nation's Internet mecca. Chandler says her office provides virtual tours of every home it sells, and has its agents on call 24 hours a day, seven days a week via e-mail and cellphone for client access.
"We are more high-tech here because we have to be," she says. "Because that's our clientele -- high-tech clients."