san francisco – Page 24 – The Real Estate Beat

How Important Is The Lender in a Real Estate Purchase?

More important than you think….

Hi! Sabrina Caton here, Realtor with Berkshire Hathaway HomeServices in Redwood City. I wanted to write my own article today – to shed some light about the importance of the Lender you are working with when purchasing Real Estate in the Bay Area.

If you are a Buyer in the Silicon Valley – then you already know how competitive this market is. If a Buyer wants to be the winning bidder on a home – they pretty much have to write their best offer – Non Contingent. Meaning they’re locked into that contract no matter what. Interest rates rise and they can’t afford their loan? Doesn’t matter if their offer is Non-Contingent. House doesn’t appraise for their offer price? The Buyer better pony up the money or risk possibly losing their good faith deposit – because the offer was Non-Contingent.

As scary as Non-Contingent sounds – it is doable – as long as a Buyer has their ducks in a row – and what I mean by ducks is the Buyer is working with a terrific Realtor and a fantastic Lender, who has already run their credit, taken their application and had the Underwriter review it all before drafting the Pre-Approval Letter.

Often times, at this stage in the process – a Buyer is looking for the best “deal”. Meaning – they will follow the path that gets them the “most money” – or so it is perceived. People may shop a Lender based on their closing costs, the interest rate quoted or because they know them. All fine and well – but we need more! The worst is when a buyer uses any Online Lending Score – that is a horror story for another blog post. (Just take my advice and use a local Lender when buying in the Bay Area.)

When a Buyer is writing a Non-Contingent offer – they are heavily relying on what their Lender has told them. What some Buyers overlook is the followthrough. Did the Lender have the Underwriter (The Bank God as I call them) review the application to ensure they fit into the box? Did the Lender verify employment? Does the Lender know one income earner is on leave? Will their income still be used to qualify for the loan? What happens if their income is not used? What happens in a Buyer takes on new debt? What is a Buyer pays down debt? So many issues can up at any time, it is best to start off with their best foot forward.

The last thing a Buyer needs once they get an offer accepted is surprises in their loan. Like – they don’t have a loan! Large purchases that change their debt to income ratio can turn a Buyer from Pre-Approved to Not Approved. To make things worse – what if a Buyer found this out AFTER their Non-Contingent offer is ACCEPTED?! Well – the Buyer could risk losing their Good Faith Deposit and around here that’s 3% of the purchase price and our purchase prices are at least $1 – $1.5 million dollars. So we’re taking $50,000 here!

Unless a Buyer is buying a home in cash – the home loan is the most critical part of the transaction. Any Sellers Realtor worth their salt will call each Lender on each offer they receive – to ensure the strength and validity of the loan. Because without the loan – there is no sale and NO SELLER is going to risk the most important sale of their lives on “what if’s.”

I could go on and on about the horrors of bad lending. So instead let me leave you with this. When you are starting the journey towards homeownership – the true first step is to apply for a home loan and determine your budget. That entails sitting down and making your own personal home budget. Itemizing what you spend your money on and how much you have left towards the mortgage. Once you’ve applied for a home loan, find a Reatlor your can talk to and trust and sit down and do just that – talk. Each client is a unique situation and therefore requires a different plan. The Caton Team is comprised of myself Sabrina and my partner/mother in law – Susan. Together we have 35 years combined, local real estate experience. Chances are we’ve worked through similar situations as you are in now. Our time is free, our advice is free – put us to work for you.

If you’ve got Real Estate questions – we’ve got answers. Contact the Caton Team when you are considering a purchase or sale of Real Estate.

I wrote this…

Got Questions – The Caton Team is here to help.

The Caton Team strives to be more than just Realtors – we are also your home resource. If you have any real estate questions, concerns, need a referral or some guidance – we are here. Contact us at your convenience – we are but a call, text or click away!

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

The Caton Team – Susan & Sabrina
A Family of Realtors
Effective. Efficient. Responsive.
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Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina DRE# 01413526 / Susan DRE #01238225 / Team DRE# 70000218/ Office DRE #01499008

The Caton Team does not receive compensation for any posts. Information is deemed reliable but not guaranteed. Third party information not verified.

How to Sell and Buy Real Estate in Today’s Market

Are you a Move Up Buyer in Silicon Valley? Then you know how hard it is to take that goal and realize it. It is much harder to sell and buy today than ever before!

If you’re a Buyer in the Silicon Valley – then you are well aware of how competitive it is to get a house in this market. A Buyer may have started off with big dreams, the want list, the wish list and then quickly condensed the list to one thing – I want a house – any house in the Bay Area.

It’s that nuts.

Why?

The Bay Area has limited space to build. Land is the gold of Real Estate, without land you cannot build more homes. So if you want to own a home around here – get ready for the bidding wars.

But if you’re a Buyer with a home to Sell first – then you’re really up for a challenge.

Seller EXPECTATIONS

If you’re a Seller these days – you have some expectations. With multiple Buyers for each home – a Buyer pretty much has to do the following to be a candidate:

OFFER OVER LIST PRICE – sometimes even more than the Comparative Market Analysis (CMA) warrants. This can be frightening and can setup a Buyer for some surprises*. The Caton Team always prepares a CMA and gauges market activity to help a Buyer determine their right price.
WAIVE ALL CONTINGENCIES – These days a Buyer cannot ask for repairs, or request time to sell their current home . If a Buyer wants to be a contender – they must come in Non-Contingent and ready to close. Let me re-phrase that. A Buyer must write THIER best offer and if that includes a contingency – the Buyer must do what is best for them. Just know – if there is a contingency – generally that offer goes to the bottom of the stack because in this market, the Seller has plenty of offers to choose from and does NOT have to accept a Contingent Offer – no matter how cute the letter is. (Note, in cooler markets Buyers have more leverage and will have the opportunity for Sellers to accept contingencies. It’s just not that market today.)
PROOF OF FUNDS – A Buyer MUST HAVE ALL their down payment, closing costs and reserve monies ready from DAY 1! Not only for their bank loan approval – Buyers need proof of funds just to write a contending offer! To be frank, sometimes a great offer is beat out by an offer with “better” proof of funds – IE – money in the bank.
Each Seller and their Realtor will REQUIRE Proof of Funds to be submitted WITH the Offer. Meaning your Realtor needs recent copies of all your bank statements to be provided in your Offer Package to show money for the downpayment, closing costs and reserves. You would too if you were in the Seller seat. Our job as Realtors is to protect OUR Clients best interests. Meaning, while reviewing offers, not only does The Caton Team call each lender to verify loan strength – we also want to see Proof of Funds totaling at minimum the monies for said deal AND reserve funds which are healthy and liquid to ensure – if things go awry – there are funds to close on time. In other words, the strongest reserves has an impact on what is considered the “Best” offer. It is not always price that equates as “Best”. (Curious why? – Ask us anytime – it is another blog post.)
An example of a Buyer surprise* is when the appraised value is lower than the offer price. The Buyer may need to pay the difference between the appraised value and offer price because there are NO Contingencies – a Buyer must perform or quit. Quitting on a Non-Contingent Offer means the Buyer could forge all or a portion of their good faith deposit – which is 3% of the total purchase price. Note – each case is different and this is just an example. Bottom line – selling Real Estate is serious business and being prepared is the first step.

There are several more items that make the perfect Offer Package – so if you’re curious – contact The Caton Team.

Ok, so now you have an idea of what it takes to buy a home around here. Now what do you do if you have a home to sell first? Bear with me on this – it is the hottest topic in Real Estate today.

HOW TO SELL THEN BUY

If you’re lucky enough to already be a Silicon Valley homeowner – congratulations! You’re ahead of the game. Right? Unless you need more space and want to move up. The Caton Team has met many clients who opted to add onto their existing homes. Great! Unless that is not an option. Then we are back to square one – How does a Buyer sell then buy in this market?

As I stated above in Seller Expectations, the “requirements” for contention can feel like a tall order. If your down payment funds are tied up in the equity of your home – you have several options but only a few are viable in this market.

DREAM OPTION

Rich Aunt Sally gifts you the money you need for the purchase of the home. Thank you Aunt Sally. But what if we don’t have rich relatives?

SELL FIRST OPTION

This is the cut and dry option. Sell the home. Close Escrow. Move out and into a short term rental or with relatives. Bank the proceeds of the sale – aka: the downpayment and enjoy the Home Buying Experience at your own pace knowing you can A) Prove your Funds and B) Go in Non Contingent.

Oh – Did I mention this option is also terrifying? A Seller feels as if they are loosing their only piece of California – the “what if we don’t get the next one” can be frightening. That’s why this option that is often chosen last. Next up…

SELL FIRST WITH RENT-BACK OPTION

Similar to the first scenario – except instead of moving out at Close of Escrow – the Seller is granted Rent Back to live in the home for an agreed timeframe and cost, then move out – whether or not the Seller has acquired their next purchase. The advantage to this is the Closing – the Seller has the proceeds in the bank and can write a non-contingent offer on their next home. The down side – it is a short term solution – if the Seller doesn’t find their next home within the time frame – they will have to move out when the tenancy is over no matter what.

OBTAIN AN OFFER TO PURCHASE

This option is often the first step – the proverbial toe in the water. We, as your Realtors will try to find a Buyer willing to do the following:

Offer to Purchase the home with an Extended Close of Escrow, giving the Seller time to acquire their next property then quickly close on one then the other – a Domino closing effect. The downside, their proceeds are not in the bank; therefore the Proof of Funds will be short AND even if the Seller writes a Non-Contingent Offer – we as Realtors know – it isn’t over until it’s over. In other words, when comparing offers – the one with less strings attached wins. Even Non-Contingent Offers in this scenario are not as strong as Buyers ready, willing and able to close on time. IE: Don’t have to close one house before they can close on the other. Confusing right?

That’s why inevitably, if a Client truly needs more space and cannot add on – they often are forced to sell first, rent then buy because this market is too competitive to request contingencies from the seller. – Please don’t shoot the messenger –

THE LONG ROAD

Now here’s my idea – but it takes a few years and you truly need to ask your CPA. The idea is – the Seller moves out into. (Where? That is not part of my scenario.) The Seller then converts their personal residence into a rental – renting it out for a minimum of 2 years. (I cannot give tax advice, so please verify with your CPA). After those two years, the Seller sells their home as a 1031 exchange, then buys their next home – as another investment. The caveat – the Seller cannot move into their new home until it’s been rented for at least 2 years. Again run this by your CPA as tax laws change and I am not a CPA. Anyway, this is the long term approach. The good news, especially if you’re buying in the same community, even if prices rise – hopefully so will the value of your current investment. Anyway, can you tell I have several clients in the same boat? This blog post was really just me organizing my thoughts then I figured – why don’t I just share this – if I can help someone make a better decision for their future – then I did my job today.

THINGS TO CONSIDER

Right now – the forecast is Interest Rates will rise. This can diminish a Buyer’s buying power. As the interest rates rise the amount of the loan reduces. To remedy this – a Buyer will need to bring in more monies towards the downpayment. Easy, if we have Aunt Sally on speed dial.

The Caton Team cannot forecast the future but we have endured all sorts of markets. We always worry about our Buyers waiting themselves out of the market and in this still inclining market – that can happen faster than you think. Ask us anytime – we’re in the trenches, we know what homes are selling for before the internet gets wind. It’s wild out there but we’ve got you covered. Susan and I have over 35 years combined, local real estate experience. We represent our clients with integrity. Our offer packages stand out and often times just the edge a Buyer needs in this market. Our Seller Package is successful, our negotiating is skilled, kind and focused. We pride ourselves in being effective, efficient and responsive.

Real Estate is multi faceted and this blog is just the tip of the iceberg. Each family has a unique set of needs. We value the sit down time to get to know what you need whether buying or selling a home in the Bay Area.

What Can The Caton Team Do For You?

Thank you for reading and forgiving my typos, Sabrina – I wrote this…

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The Caton Team believes, in order to be successful in the San Fransisco | Peninsula | Bay Area | Silicon Valley Real Estate Market we have to think and act differently. We do this by positioning our clients in the strongest light, representing them with the utmost integrity, while strategically maneuvering through negotiations and contracts. Together we make dreams come true.

A mother and daughter-in-law team with over 35 years of combined, local Real Estate experience and knowledge – wouldn’t you like The Caton Team to represent you? Let us know how we can be of service. Contact us any time.

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Berkshire Hathaway HomeServices – Drysdale Properties, Redwood City Ca.

DRE # | Sabrina 01413526 | Susan 01238225 | Team 70000218 | Office 01499008

The Caton Team does not receive compensation for any posts. Information is deemed reliable but not guaranteed. Third-party information not verified.

7 Things Buyers Do That Real Estate Agents Hate

7 Things Buyers Do That Real Estate Agents Hate

By Angela Colley

Buying a house is a process. One where you’ll spend a lot of quality time with your Realtor®. One where you might even drive him or her a little … nuts.

No, we’re not talking about that time you called after 10 p.m. because you saw a house online and had to see it immediately (though, hey, you might want to ease up on that, too). We’re talking about the stuff you do that actually sabotages your chances of getting the right house, at the right price—or getting a house at all.

If you’re guilty of any of the following, we’re here to tell you to stop and get on your Realtor’s level, lest you risk losing the home of your dreams.

1. Caring too much about aesthetics

Your real estate agent is happy to show you as many houses as you want—she just wishes you’d see beauty is only skin-deep (and very often totally fixable!) when it comes to real estate.

Many buyers get caught up in how a house looks right now. And if it looks dirty, outdated, or in need of small repairs, you might be tempted to run. After all, how much is all that going to cost anyway?

Not much, sometimes.

“I’ve had clients see some marks on a wall and a stain on the carpet and say, ‘This home needs $50,000 worth of work.’ That’s not anywhere close to the renovations needed,” says Joshua Jarvis, owner of Jarvis Team Reality in Brookhaven, GA.

Plus, you may not end up paying anything at all.

“The cost to make the home like new is often easy to negotiate” in the deal, he says.

2. Tipping your hand

You know how it goes. You’ve seen a billion places. You’re totally comfortable with your agent. Your feelings just start to slip out. You’re getting a bit loose-lipped. Like, why is there shag carpet in the bathroom, anyway?

But voicing your criticism could spell disaster.

“There’s been instances where the seller has been home and overheard the buyer, and it’s hurt them in negotiations,” Jarvis says.

Even if they aren’t home, Jarvis has had clients get busted on video, and in open houses the listing agent might be there. It’s best to save your jokes about the seller’s vast “Frozen” figurine collection until you’re back in the car.

3. Waiting too long

Found a house you want to buy? Don’t wait. Taking too long to make an offer in a competitive real estate market can drive your agent crazy, and for good reason.

“If too much time passes between a buyer viewing a home and making an offer, the seller might not take you as seriously as another party who quickly expressed interest and maintained communication,” says Dan Hicks, a Realtor with Equity Colorado Real Estate in Denver.

4. Thinking it’s all about the money

Don’t get us wrong—how much you’re willing to offer for a house is a huge part of your offer. But it isn’t the only thing you should worry about.

“It’s not necessarily the highest offer that the seller will accept, but rather the best structured offer,” Hicks says.

Your agent knows a good offer is a mix of timing, the right price, and reasonable contingencies (those clauses that give you the option to bail out of the deal if something isn’t met). If you decide on a price, but refuse to cave on 10 contingencies, you’re probably frustrating your agent—and the seller—more than a bit.

5. Ignoring what the seller wants

When you’re shopping for real estate, it’s hard not to see a house as a product you’re buying.

But real estate isn’t like other business deals. You’re buying from another person who has to choose you as the buyer.

Sellers are motivated for different reasons. Some are entirely driven by money, for example, while others want to see their first home go to someone who will love it as much as they did.

“When you hire a Realtor to represent you in the purchase of a property, [they’re] gathering information about the seller’s motivation,” Hicks says.

They’ll use that information to help you build the best offer, and if you’re ignoring it, you could be hurting your chances.

6. Talking to the other team

OK, let’s get this out of the way: The listing agent is not the enemy. But talking to him without your own agent present is never a good idea, even if you think you’re just being friendly to help seal the deal.

“I’ve had clients talk to the seller or agent and divulge information that would harm them,” Jarvis says. “Stuff like ‘Oh, don’t worry about inspections, my company is paying a huge relocation bonus’ doesn’t exactly set the stage for a tough negotiation with the seller.”

Even if you don’t think you’re saying anything that could hurt, you never really know. Remember, “the listing agent’s job is to get the most money for the seller,” Jarvis says. Just don’t do it.

7. Lowballing the counteroffer

So the sellers didn’t accept your offer, but they’re willing to consider a counter. If your next offer isn’t reasonable, at best, your agent will spend a lot of time going back and forth between you and the sellers’ agent. At worst, you’ll frustrate the sellers and lose the house for good.

We get it. You don’t want to overspend or give in on too many parts of the deal, but don’t be a Scrooge. Listen to your Realtor. By now, he knows what the seller will and won’t accept.

After all, you hired him for a reason. Realtors are pretty good at what they do.

We want and need our clients to be open and honest with us – so let’s talk in private! We’ve seen it all!

I read this article at: https://www.realtor.com/advice/buy/seven-things-buyers-do-that-real-estate-agents-hate/

Got Questions – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

The Caton Team – Susan & Sabrina
A Family of Realtors
Effective. Efficient. Responsive.
What can we do for you?

The Caton Team Testimonials

The Caton Team Blog – The Real Estate Beat

The Caton Team Website

The Caton Team Advantage

How to Buy While Selling Real Estate

Want Real Estate Info on the Go? Download our FREE Real Estate App: Mobile Real Estate by The Caton Team

Visit us at: Our Blog * TheCatonTeam.com * Facebook *Yelp Us * My Yelp * Instagram * HomeSnap* Pintrest * LinkedIN Sabrina * LinkedIN Susan

Thanks for reading – Sabrina

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

The Caton Team does not receive compensation for any posts. Information is deemed reliable but not guaranteed. Third party information not verified.

Find Out What Really Happens When You Waive Contingencies to Score a Home

Find Out What Really Happens When You Waive Contingencies to Score a Home

By Rachel Stults

In a white-hot market, you may feel pressure to make some concessions to win over a seller—and, no, we’re not talking about sending a basket of banana-nut muffins.

When you make an offer on a home, it’s standard to throw in some contingencies—telling the seller that if the home isn’t up to snuff for a variety of reasons, you have the right to walk away from the deal—with all of your cash in hand.

That’s all hunky-dory in a buyer’s market. But as the housing market has rebounded, buyers are getting competitive—more and more are waiving those contingencies, or protections, in order to speed the deal through to closing.

You want the house, and the seller doesn’t want any hiccups. So getting those pesky contingencies out of the way is a win-win, right?

Of course not!

It’s riskier to waive some contingencies than others. We set out to discover which are the most innocuous of the bunch—and which are the most terrifying. We asked an expert to discuss the pros and cons of each common contingency, and then we ranked the risk factor of waiving it on a 1-to-5 scale, with 5 being the highest.

Remember—these aren’t hard rules. Everything depends on your local market, your personal situation, and, above all else, your tolerance for risk.

Contingency: Early move-in

Fear factor: 2

Closings can be delayed, so many buyers ask for the right to move in their possessions (or themselves) early. But it isn’t something sellers or seller’s agents love.

“I would never allow my sellers to agree to it,” says Katie Wethman, a Realtor® with The Wethman Group at Keller Williams Realty in McLean, VA. “There are just too many unknowns if the deal doesn’t close.”

And those unknowns go both ways.

If you move in early, you’ll lose some of your negotiating power. After all, it’ll be much harder for the seller to believe you’ll walk on the deal if you’ve already moved all your stuff in. And if the deal falls through, you’ll face eviction from the seller and scramble to find a short-term living arrangement.

Bottom line: Moving in early could potentially do more harm than good, so waiving this contingency has minimal risk.

Contingency: Homeowners association rules

Fear factor: 1

The homeowners association rules contingency lets you get out of the deal if you discover the restrictions don’t jibe with your lifestyle (say, they won’t allow you to have three Rottweilers or paint your front door eggplant).

Let us be clear: We do not recommend getting to this point on your path to homeownership without asking about the basics of the home you’re trying to buy—including HOA rules. Ask for a copy and read it before making an offer.

Bottom line: Since we think you should do your homework, waiving the HOA contingency seems pretty low-risk.

Contingency: Financing

Fear factor: 4

This contingency gives you the right to back out of the deal if your home financing falls through. And waiving it can go very, very wrong.

That’s because any number of things could happen before your loan’s been sent through underwriting. The lender could decide to lower the total loan amount, spike the interest rate, disqualify you from a certain loan, or a myriad of other “oh crap” situations. If you’re locked into a home offer and can’t hold up your end of the bargain, you could lose your earnest money.

But not every buyer needs to worry as much about financing. Say, for example, you’re paying in cash. You won’t need the lender, so you won’t need this contingency. And if your credit is spotless, you’re making a solid (at least 20%) down payment, and you’ve had the same good job for a while, you’re also in a better position to take this risk.

Bottom line: Talk it over with your Realtor and mortgage broker and find out just how confident you should be in your financing. But keep in mind: Even with a pre-approval letter, things can still go awry in the final lending stages (including the appraisal—see the next item). That’s why we’re rating this one high on the risk radar.

Contingency: Appraisal

Fear factor: 3

An appraisal is required by most lenders, and it can be useful to buyers trying to negotiate a price. But appraisals can be tricky.

That’s because a number of factors can affect the outcome of an appraisal: the appraiser might rely heavily on the value of comparable homes that sold for mysteriously low prices, or perhaps he saw the house in less-than-ideal conditions.

And especially in a hot market where homes are selling for inflated prices, the appraisal value might not match your expectations—but you still won’t get a discount.

“Sometimes the market—that is, the price a buyer and seller agree to—isn’t the same number as what an appraiser thinks it’s worth,” Wethman says.

Bottom line: If you’re looking to woo a seller, you might want to skip the appraisal contingency, especially if you think it won’t change the asking price of the house. But be careful—your lender may not agree to a loan over the appraisal price, leaving you to foot the remaining cost of the home.

Because it could go either way, we’re placing the risk level squarely in the middle.

Contingency: Home inspection

Fear factor: 4

The right to get a full, professional home inspection—and flee into the night if new and horrifying info comes to light—is a crucial contingency.

Without a licensed inspector viewing the property, you can only guess what might be potentially wrong with the home, now or 10 years down the line.

By waiving this contingency, you lose the right to make any requests for additional repairs—or to run away—before the deal closes. This is scary stuff, people. Nobody wants to be stuck in a money pit.

If you’re still convinced waiving this contingency is the only way to win the seller’s heart, try finding some neutral ground, Wethman says. Like a general inspection contingency, which gives you the right to void the contract, but not to ask for repairs.

Bottom line: Unless you know you’re getting a fixer-upper and will have to make repairs anyway, you’re gambling big time by waiving this one.

Contingency: Clear title

Fear factor: 5

If the opportunity arises to waive this one, it’s time to run for the hills. Abort mission. Just say no.

You may not be able to waive a clear title search in your area—in some parts of the country, it isn’t even legal. But if you discover you can, don’t.

A title search will churn up all kinds of important info—like who actually owns the home and if there are any liens on the property. It might seem far-fetched, but title problems happen all the time. Waive your right to it, and you might find that along with your new home, you’ve acquired thousands of dollars’ in liens.

“Personally, I would never waive this even if it was an option,” Wethman says.

Bottom line: Seriously, the risk is high.

———

Don’t forget to ask your Realtor’s advice before you waive any contingency. All deals are unique, and only a pro who knows you and the market can tell you how to strike the best deals to score your dream home.

Each client and each home is unique – The Caton Team is happy to come up with a personal and tailored offer plan with you for each home your pursue. Contact us anytime!

Got Questions – The Caton Team is here to help. We are but a call or click away!

The Caton Team is comprised of Susan and Sabrina Caton – a mother/daughter in law team. We are full time, local Realtors with over 35 years of combined Real Estate experience. How can The Caton Team help you?

I read this article at:

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Thanks for reading – Sabrina

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Effective. Efficient. Responsive. What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

The Caton Team does not receive compensation for any posts and the information is deemed reliable but not guaranteed.

How to Make an Offer That Can’t Be Refused

How to Make an Offer That Can’t Be Refused

By Angela Colley

Really excited to share this article as finding the motivation is a huge name of the game when The Caton Team represents Buyers in the Silicon Valley Real Estate Market. I’ll add my 2 cents as we go.

You’ve found the perfect house. You can already see yourself unpacking your books, pulling all the glassware out of crates, setting up the PlayStation 4. You’re ready to make an offer. Nothing could go wrong now. Except, wait a minute. What if there are other offers? What if the seller doesn’t like your offer? What if the seller doesn’t like you?

Don’t panic. There’s a way to make an offer that can’t be refused—and the answer is better than “cough up more money.” Way better. Use the science of human behavior!

Find their motivations

To seal the deal, you have to know the seller’s motivations. Yes, we know that sounds like a self-help book gimmick, but it’s true. We’re all motivated by something, and seeing things from the seller’s point of view can help you write a killer offer.

Sellers are usually primarily motivated by one of three things, according to Diana George, founder of Vault Realty Group in Oakland, CA.

The bottom line (aka money”)
A rush to move/dont want to drag the selling process out (terms)
Emotional attachment

Of course, all sellers are at least a little motivated by cash (after all, they’re not giving the house away), so that will usually overlap with the other motivations. Say, for example, the sellers are emotionally attached to their house. If you’re in love with the property, too, you might have an in, but that doesn’t mean you’ll get it for nothing.

“The buyer who thinks they can come [below] asking and honestly believe they have a shot at winning is making a mistake,” says George.

But money isn’t all that matters.

To find out what is motivating the sellers, have your Realtor® do some digging.

“I always call the real estate listing agent and speak to them directly to get a better understanding as to what is driving the seller,” George says. In some cases, she finds out the sellers have written a letter about the history of the home for potential buyers (showing they’re emotionally connected). In other cases, the buyers are in a hurry to move (and will be motivated by easy and fast closing terms). And sometimes they just want to get a lot of offers and pick the highest bid.

Calling your fellow agent is key. The Caton Team always calls the sellers Realtors to discuss the sale and the sellers needs. When I represent sellers – I can tell you first hand – VERY FEW agents call me – so picking a buyers Realtor is just as important as picking your listing Reatlor.

Your agent won’t always be able to learn everything. “It all depends on how much the listing agent is willing to disclose,” she says. But you can up your chances by asking your Realtor for something simple: Call the seller’s agent and talk to her in person. Having that spur-of-the moment conversation can make all the difference.

“The buyer’s agents who are communicative, persistent, and follow up by actually picking up a phone and calling the listing agent are most likely to discover the motivations of the seller,” George says.

George – said it all!

If they’re motivated by money

If the seller is all about the Benjamins, you’ll need to submit the highest offer to get the home—and in a competitive market, the listing price may just be a starting point.

“We tell our buying clients in this hot seller’s market to be prepared to bid over $100,000 depending on the area,” George says.

To get an idea of what to offer, you and your agent should compare recently sold homes in the area. And if you get in a bidding war, don’t expect the sellers to come back with their own offer.

“Nowadays, sellers send out offers asking for the buyer’s highest and best offer,” George says. “At this point the buyers have one or two chances to come in with their all.”

If they’re motivated by terms

If the sellers are motivated by terms, they want the deal over and done with—as painlessly as possible. You’ll probably have to give up some contingencies (the clauses that give you the option to back out of the deal if something doesn’t go through). Even though those contingencies might help you, they can slow down the sale—something the seller doesn’t want.

But what do you give up? Usually, it’ll come down to some peace of mind.

“Many sellers are disclosing the termite and home inspection reports in an attempt to persuade buyers to offer noncontingent,” George says.

And if those reports are clean, you might be safe to waive your own right to inspect and cross your fingers nothing goes sideways.

Don’t want to give up the inspection from the pro? Give in on another contingency to push things along.

“The other huge trend we are seeing is buyers waiving their appraisal contingency, meaning if the home comes in below the offer price the buyer has to come in with the difference,” George says.

If they’re motivated by emotions

If the sellers are attached to their house, they’re going to have a hard time letting it go to just anybody. You can prove you aren’t just anybody by writing a personal letter.

“Just be honest and be yourself,” George says. “Many of the letters we read are very genuine and emotional.”

But remember, you’re writing a personal letter, not a resume. The seller is more likely to be interested in why you want the house and what your personal plans are for the future, than in what you do for a living.

The faster the better

Once you know how to approach the offer, consider the timing. Generally, the faster you can submit an offer, the better.

“Being the first offer in on a deadline means you just became the leverage offer,” George says.

Even if the seller doesn’t accept your offer right away, your offer will become the yardstick against which other buyers are measured.

If you’re not first, make sure your offer is solid and submitted in a reasonable time frame. Many sellers have a deadline for accepting offers before they start considering candidates, and you don’t want to miss out because you sat on the fence.

Don’t get cocky

It’s tempting to submit a lowball offer just to see what the seller will do, but the seller may get irritated and just stop working with you altogether.

But on the flip side, don’t get excited and blow past your budget.

“You need to figure out how badly you want this house,” George says, “and how far you’re willing to go.”

There are many facets in Real Estate. The Caton Team how just about seen it all and we know how to make our clients and their offers – SHINE!

Got Questions – The Caton Team is here to help. We are but a call or click away!

I read this article at: https://www.realtor.com/advice/buy/in-it-to-win-it-the-science-behind-making-a-killer-offer/

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

Want Real Estate Info on the Go? Download our FREE Real Estate App: http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at: http://thecatonteam.com/

Visit our INSTAGRAM page: http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn: https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive. What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

The Caton Team does not receive compensation for any posts and the information is deemed reliable but not guaranteed.

How to Win a Bidding War Without Coughing Up More Money

How to Win a Bidding War Without Coughing Up More Money

By Liz Alterman

Sabrina here – of the Caton Team. I loved this article and had to share it. The Caton Team goes above and beyond for each client ON EACH OFFER – no matter how many offers we write. It makes a huge difference. The Caton Team Advantage has helped several first time buyers, and move up buyers WIN the Silicon Valley Bidding War and not aways because of money – read on and call The Caton Team anytime – happy to share what works in our market….

When my husband and I were in the market for a home in the fall of 1999, a period in the real estate industry known for its notoriously low inventory, we fell in love with a property and were willing to do almost anything to make it ours. So when we learned another buyer had made an offer, we panicked. Were we prepared to compete in a bidding war? And if so, how high could we go?

Oddly enough, when we countered with a slightly higher bid, the seller came back with a unique proposition: Keep all the outdated appliances and close by the end of the year, and it’s yours, he said. Seeing our confusion, he explained that the other buyer wanted him to dispose of the old fridge and upgrade the stove. But the seller was busy with a cross-country work move, and didn’t want the hassle. He also wanted the deal done before year’s end.

So, we agreed to these terms—and won the house.

Because we’re once again in a seller’s market, buyers may find themselves scrambling for properties and looking for ways to one-up the competition. While many are ready and willing to go well above the asking price, others get creative. Below are some less expected ways prospective buyers have won over sellers to get not only their foot in the door, but the keys to castle as well.

Putting heart and ‘sole’ into it

What if you had access to something typically hard to get that you realized your seller would love? You should use it to your advantage.

“I had a buyer who, when we were touring, saw that the seller had an epic shoe collection. My buyer worked for a very well-known, high-end shoe designer at the time, and offered her five new pairs of shoes of her choice. Needless to say, we got the deal,” says Tyler Whitman, an agent at Triplemint.

Have a friend who can score orchestra seats to “Hamilton,” or tickets to a playoff baseball game? If you have a connection, this may be the right time to use it.

Making a ‘moving’ gesture

Anyone who’s ever left one home for another knows what an enormous hassle it can be to find a reputable mover—plus it can get awfully expensive rather quickly. What if someone else decided to handle all that?

Roh Habibi, at The Habibi Group, recently had a buyer who was competing for a Spanish Mediterranean–style home, priced at around $2.5 million. His client upped the ante by offering to pay for the moving crew and presenting gifts to the seller’s children: a basketball for the son, Peppa Pig toys for the daughter, and a small trampoline for the pair to share.

“The seller loved the gesture to pay for the mover, as that is a huge undertaking,” says Habibi. “The buyers also did their best to touch the hearts of the seller and succeeded winning in a very heated bidding war.”

Sweetening the deal

It isn’t always easy for a buyer to meet a seller face to face. But should the opportunity arise, make the most of it.

“My sellers were at home in the evening when the buyers were returning to the house for a second visit,” explains Suzanne “Suzy” Minken, an agent with Berkshire Hathaway HomeServices based in Summit, NJ. “Simply meeting the homeowners can be very helpful, since it gives homeowners an opportunity to establish a bond or rapport with the potential buyers. And an in-person comment about how much the buyers love the house is very powerful.”

That’s nice, of course, but what about taking it a step further? Minken recalls a time when the sellers actually received homemade baked goods from prospective buyers.

“What really comes as a surprise and makes a very big impression on the homeowners is a small gift, much like what you would bring to someone’s home when invited for dinner,” adds Minken. “On this particular evening, knowing that the homeowners would be there, the buyers brought them a homemade apple pie. The gesture made a very big difference in accepting their offer to purchase the house.”

Waiving a mortgage contingency

Even if you can’t pony up an all-cash offer, if you’re fortunate enough to know that securing a mortgage won’t be a problem, you may want to waive the mortgage contingency. Julie Gans, an agent at Triplemint, notes that buyers who waive mortgage contingencies have been successful in beating the competition without needing to up their offer.

“This cannot compete with an all-cash offer, but it is better than having contingencies and a deal falling apart,” notes Gans.

So, while we usually hear that “cash is king,” sometimes alternatives to offering more money can be just as effective.

Adding cute photos with your offer letter

Along with a heartfelt offer letter, buyers should consider throwing in a photo of their family—and their pets.

“Sending in a family picture did help in one of the offer situations I was in, especially with adorable kids and a lovable-looking pet,” says Cara Ameer, an agent with Coldwell Banker. “It’s not always the magic pill because there are often many dynamics at play with these offers, but it helps to put a face with a name and number on a piece of paper.”

Let’s face it—cliché or not, it can be tough to say no to a photo of cute kids and pets.

Got Questions – The Caton Team is here to help. We are but a call or click away!

I read this article at: https://www.realtor.com/advice/buy/win-bidding-war-without-offering-more-money/?identityID=9851214&MID=&RID=353497822&cid=eml-2018-0629-WeeklyNL-blog_8_marketing_winbiddingwar-RDC

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

Want Real Estate Info on the Go? Download our FREE Real Estate App: http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at: http://thecatonteam.com/

Visit our INSTAGRAM page: http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn: https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive. What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

The Caton Team does not receive compensation for any posts and the information is deemed reliable but not guaranteed.

Zen Your Space

6 Ways Your Living Room Is Stressing You Out—and How to Make It Zen

By Jamie Wiebe

In a perfect world, your living room should be a space for relaxing, entertaining, or playing with the kids—a one-stop shop to hide away from the worries of the day. So why do some of us end up avoiding this space at all costs?

It turns out, your living room decor choices (or lack thereof) could be stressing you out. Stop the tension in its tracks by making these easy design changes, which promise to smooth your mood and transform the space into the laid-back paradise you deserve.

1. Clutter

You had to know this would be the first thing we’d call out: It’s OK for your living room to look lived-in (it is in the name, after all). But too much “living” can leave a space looking like a junkyard. And, you guessed it: Mess and stress are psychologically linked.

“The living room is a notorious catchall and, as humans, we love to dump our stuff there,” says Leigh Spicher, the national director of design studios at home builder Ashton Woods.

Spicher’s living room has “beautiful architectural finishes, large windows, and a glorious brick fireplace”—but she doesn’t notice those things. Instead, she sees the toddler toys, dog bones, shoes, remote controls, magazines, and more.

Improve your mood: Tuck away games and books in built-ins, and choose furniture with storage so you can easily keep odds and ends out of sight.

2. Sounds and smells

Clutter isn’t just visual. “It’s also found in other senses, such as noise and scent,” Spicher says.

Think about your living room: Do you have a Sonos and a television? Do your kids watch YouTube on their tiny screens while you’re watching “The Bachelorette” on the big screen? All that noise keeps you on edge and prevents relaxation—no matter how many glasses of rosé you down during the show.

Think beyond the audio, too: “Avoid numerous scents,” Spicher says, “especially unnatural scents, such as plug-ins.”

Improve your mood: Pick one primary scent—ideally a natural one, like your favorite potpourri—and make sure to play only one audio source at a time. Really, try it.

3. White fabrics

You might love the all-white look, but a living room isn’t always the best space for stark, minimal decor.

“Yes, we all want our living room to be nice and perhaps a bit more formal than the rest of the house,” says designer Mark Cutler. “But stay away from white fabrics or you’ll constantly be worried about spills and stains.”

Darker colors cover up messes and allow you to live in your living room—not just tiptoe through the space.

Improve your mood: Of course, if you can’t live without all-white decor, go for it. But consider your limits: Will you feel stressed out whenever a guest sips red wine or coffee? Are you willing to drop everything and scrub away whenever you spot the slightest bit of dirt? If not, consider a darker decor scheme.

4. Bare windows

Even if you’re tucked away deep in the woods, it’s hard to shake the spooky sense that you’re being watched when there’s nothing between you and nature.

Full-strength, unfiltered sunlight causes stress, too. (Think about your living room heating up with the afternoon sun, or not being able to see your TV due to a full-screen glare.) Covering up your windows returns your sense of control, and helps your living space feel private and personal.

Improve your mood: “Don’t skimp on blinds, curtains, and shades,” says Nicolette Powell, an interior designer at Oasis Rug & Home. “They bring style to a living room, and they’re functional.”

5. Artificiality

If you’ve been feeling a little on edge lately, take a look around your living room: Are you missing some greenery?

“If we omit natural elements in our living room, we are inviting stress in,” Spicher says.

Improve your mood: Add more plants. If you’re allergic to greenery or just not a fan of the look, there are a number of other options. Consider adding a small water element, like a fish tank, or starting a fire in the fireplace. Mixing natural elements throughout your decor—think stone, metal, and wood—adds that outdoorsy feel, too.

6. Lack of design

“Living rooms are often left as an afterthought and simply built as a big box,” Spicher says. But “if there’s one room in the home that needs design and organization—besides the kitchen—it’s the living room.”

So ditch the unadorned white walls and dull decor. But beware of designing for someone else, or blindly copying what you see on Pinterest. If you pick decor that doesn’t suit your lifestyle or tastes, you might feel like you’re occupying someone else’s space—and that can be downright stressful.

Improve your mood: Consider what makes you feel the most Zen. Comfortable couches? Bright colors? Bold patterns? Play it up. Craft a well-designed space that’s tailored to your desires, and turn a stressful, empty box into a retreat you adore.

Got Questions – The Caton Team is here to help. We are but a call or click away!

I read this article at: https://www.realtor.com/advice/home-improvement/living-room-design-stressing-you-out/?identityID=9851214&MID=&RID=353497822&cid=eml-2018-0629-WeeklyNL-blog_5_livingroomstressout-blogs_trends

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

Want Real Estate Info on the Go? Download our FREE Real Estate App: http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at: http://thecatonteam.com/

Visit our INSTAGRAM page: http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn: https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive. What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

The Caton Team does not receive compensation for any posts and the information is deemed reliable but not guaranteed.

The Worst Mistake You Can Make Before Selling Your Home

The Worst Mistake You Can Make Before Selling Your Home

By Audrey Ference

If you’ve ever gotten ready to sell a home, you know that in order to fetch top dollar, you need to get your place in good shape. But that costs money—hiring contractors, painters, and other pros—so you might be wondering: Why not save some cash by tackling a few of these fix-its myself?

That’s fine and good if you know what you’re doing. But unless your DIY skills are fairly advanced, experts agree that this is one of the biggest mistakes a home seller can make. If you bungle the job, you might end up making things worse, and shelling out even more money down the road.

“You have to ask yourself: Is it likely to do more harm than good?” says Dan Bawden, chairman of the National Association of Home Builders Remodelers.

To help you separate the tasks you can tackle from those best left to the pros, here are some DIYs to avoid when preparing to sell your home.

Drywall repair

If you have rooms that need a fresh coat of paint, go for it, says Bawden. But if you have cracks in the drywall from a shifting foundation or a little depression from years of doorknob slams, it’s worth it to hire a pro.

“In my house, I wouldn’t do the Sheetrock,” says Bawden. “I’d hire someone to fix plaster or drywall. If you don’t get the texture just right, when you paint the wall, the repair is going to stick out like a sore thumb.”

You don’t want your “fix” to look worse than the original problem. Contract out the drywall repair, then DIY the paint job afterward.

HVAC

“I’ve been in the construction business for years, and I don’t mess with anything inside an HVAC,” says Bawden.

The heating and cooling systems in your house are complex, and often connected to both electrical and gas. Making a mistake could mean blowing out the entire system, setting you up for a much more expensive repair in the end.

Furthermore, you’d better believe that potential buyers are going to have their inspector go over the HVAC as thoroughly as possible. Even something relatively simple such as installing a smart thermostat can fry your wiring if done incorrectly. When it comes to your heating and AC, approach with caution.

Dishwasher installation

Unlike installing a refrigerator, stove, or washer and dryer (which can often be a simple DIY task), installing a new dishwasher is complicated.

“The complexities involved with setup, such as installing water and drainage lines under the kitchen sink cabinet, are best handled by a professional,” says Doyle James, president of Mr. Rooter plumbing.

Doing this job wrong could mean flooding your kitchen, which will ruin your floors and more. And besides, most big-box stores offer installation for a fairly reasonable price if you’re buying new units, or a plumber can handle it for $150 to $500.

Tree removal

“Even if it’s not a really massive tree, you’d be surprised how hard it is to dig around the roots,” says Bawden.

It’s also dangerous, especially if you don’t have the tools professionals would use to remove the upper part of the tree before taking out the stump. Do you really want to be that person who puts a tree through your own roof because you were too cheap to hire a tree removal professional? (No, you don’t.)

Siding and window fixes

Bawden cautions against DIY siding or window replacement, because water can seep into the walls if you don’t reseal the layers properly. It might not be noticeable at first. In fact, you may sell the house not even realizing there is a problem, but down the line, mold and water damage will start to appear.

Not only is that bad karma, it could also be what Bawden calls “lawsuit city.”

Advanced electrical

While replacing a light fixture or ceiling fan could be fine to DIY, experts draws the line at any electrical work involving the breaker box. Not only could you hurt yourself, you could also create a fire hazard, especially if your home isn’t brand-new.

“Older homes do not usually have safety devices like ground fault circuit interrupters, making it especially dangerous,” explains Shawn McCarthy, owner of Handyman Connection of Colorado Springs.

“You reach the limit pretty quickly,” agrees Bawden. “Anything that involves running new wires or repairing faulty wiring should be left to a professional.”

Aside from the risk of fire or injury, serious electrical work done by an unlicensed electrician could have code problems, meaning you’re likely to get a thumbs-down from the inspector later anyway.

Roof repairs

Even if it’s just a little fix that the average DIYer could easily do (e.g., hammering down a shingle or two or replacing chimney pipe roof flashing), be cautious.

“It’s very easy to get disoriented,” says Bawden, especially on a peaked roof. This is why even pro roofers always use a harness in case of falls, so unless you take similar safety measures, steer clear.

Plumbing

Some plumbing tasks are doable: Fixing a running toilet or snaking a slow drain should be in pretty much anybody’s comfort zone. The problem with attempting bigger DIY plumbing tasks, though, is that you often don’t quite know what you’re getting into. Disassembling leaky or blocked undersink pipes, for example, seems simple enough. But according to James, “Pipes are complex and very tricky to reassemble, particularly when they’re in close proximity to other plumbing components and machinery, such as dishwashers or garbage disposals.”

He notes that what might appear to be a straightforward problem, like low water pressure or a fractured pipe, could actually be a symptom of a larger issue with your system. Plumbing has a way of getting out of hand—i.e., broken pipes, flooding, and worse.

Got Questions – The Caton Team is here to help. We are but a call or click away!

I read this article at: https://www.realtor.com/advice/sell/selling-your-home-diy-repairs-to-avoid/?identityID=9851214&MID=&RID=353497822&cid=eml-2018-0629-WeeklyNL-blog_2_diyrepairsavoid-blogs_sell

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

Want Real Estate Info on the Go? Download our FREE Real Estate App: http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at: http://thecatonteam.com/

Visit our INSTAGRAM page: http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn: https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive. What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

The Caton Team does not receive compensation for any posts and the information is deemed reliable but not guaranteed.

Will First-Time Home Buyer Demand Withstand Rising Rates?

Written by Mark Fleming

Given the strong likelihood of rising mortgage rates in 2018, many savvy real estate market observers are curious how rising rates may impact demand, especially among millennial first-time home buyers. As part of our quarterly First American Real Estate Sentiment Index (RESI), we recently surveyed title insurance agents and real estate professionals across the nation for their perspective on how sensitive they thought first-time home buyers were to rising mortgage rates and at what rate they would withdraw from the market.

“Continued positive economic news and confidence that buyers will remain undeterred, even if rates exceed 5.5 percent, bode well for the real estate market in 2018.”

Rising Rates and the First-Time Home Buyer

According to the title agents and real estate professionals surveyed, nearly 87 percent of first-time home buyers were in the prime home-buying age of 26-35, which corresponds with the millennial generation.

On a national level, the title agents and real estate professionals surveyed believe that mortgage rates would need to hit 5.6 percent, 1.0 percentage point above the current rate, before first-time home buyers withdraw from the market. We asked the same question in the first quarter of 2017, and title agents and real estate professionals cited 5.4 percent as the mortgage rate at which first-time home buyers would withdraw from the market.

The increase in the perceived mortgage rate tipping point for first-time home buyer demand indicates that survey respondents may see more runway in the current housing market. This may indicate they realize that the housing market is more resilient to mortgage rate increases than they thought a year ago.

Even though the Fed is widely expected to raise the Federal Funds rate multiple times this year, most forecasts suggest mortgage rates will just reach 5 percent. Based on our second quarter RESI results, purchase market demand should not be materially impacted by any modest increase in mortgage rates.

The No. 1 Obstacle to Home Buyers: Limited Supply

However, while rising interest rates may not deter first-time home buyers, lack of inventory might. When asked what the primary obstacle to becoming a homeowner was, 35.3 percent of title agents and real estate professionals responded with limited inventory of homes they like. The second most cited obstacle was overall affordability (30.1 percent), followed by down payment (28.3 percent). The housing market is facing its greatest supply shortage in 60 years of record keeping, according to the Federal Reserve Bank of Kansas City. The ongoing housing supply shortage will make it difficult for first-time buyers to find a home to buy, even when they are financially ready.

“Title agents and real estate professionals do not believe increasing mortgage rates will have a significant impact on the housing market in 2018. Continued positive economic news and confidence that buyers will remain undeterred, even if rates exceed 5.5 percent, bode well for the real estate market in 2018,” said Fleming. “However, more than a third of title agents and real estate professionals see limited supply as the primary obstacle to first-time home buyers.”

Purchase Market Outlook Remains Positive

Title agents and real estate professionals maintained an overall positive outlook for the purchase market, though the outlook for purchase sales growth was slightly less positive year over year. However, as might be expected, the outlook for growth in refinance transactions declined.

The title agents and real estate professionals surveyed expect residential house prices to increase by 4.2 percent in the next year. This is up 0.7 percentage points from last quarter, and 0.1 from the previous year. The expectation for further price appreciation is not surprising, given the market dynamics at play in the housing market today that are preventing more existing homeowners from selling their homes and potentially alleviating some of the supply shortage.

For Mark’s full analysis of the second quarter RESI, the top five states for residential transaction growth and price growth outlook, and more, please visit the Real Estate Sentiment Index.

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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

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Berkshire Hathaway HomeServices – Drysdale Properties

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What’s the Outlook for Housing Market Potential Amid Rising Mortgage Rates?

What’s the Outlook for Housing Market Potential Amid Rising Mortgage Rates?

Written by Mark Fleming

With the Federal Reserve Open Market Committee (FOMC) decision to increase the Federal Funds Rate last week, the prospect of higher mortgage rates remains top of mind among real estate professionals and continues to generate headlines. Yet, changes to the short-term rate matter little to the housing market.

“The likely rise in mortgage rates is not the worry for first-time home buyers, but whether they can find something to buy in today’s supply-constrained market.”

It’s important to remember that mortgage rates, particularly the popular 30-year, fixed-rate mortgage, are benchmarked to the 10-year Treasury bond. While Federal Funds Rate hikes don’t directly drive up the yield on the 10-year Treasury, higher inflation expectations certainly do. The Fed’s decision to raise rates for the sixth time in a year and a half was primarily viewed by experts as a reaction to the possibility of higher inflation due to continued improvement in the labor market and economy in general.

Follow the 10-Year Treasury for a Read on Mortgage Rate Trends

Consider that, since the end of the recession, the 30-year, fixed-rate mortgage, on average, has stayed 1.7 percentage points higher than the 10-year Treasury bond yield. Today, the 10-year Treasury yield sits at 3 percent, which implies a mortgage rate of about 4.7 percent, given the trend since the end of the recession.

As long as economic fundamentals remain positive, it is reasonable to expect greater concern about inflation, which will likely influence the 10-Year Treasury to move higher and mortgage rates along with it. The Fed is also likely to increase the Federal Funds rate in response to inflationary concerns.

Outlook for Market Potential Amid Rising Mortgage Rates

But, will higher mortgage rates curtail demand for housing? Our Potential Home Sales model estimates the market potential for existing-home sales based on market fundamentals, including the 30-year, fixed-rate mortgage rate. According to the model, the market potential for existing-home sales based on current fundamentals is 6.11 million at a seasonally adjusted annualized rate (SAAR). If the 30-year, fixed-rate mortgage rate increases to 5 percent, which most economists agree is likely by the end of 2018 or early 2019, the impact on the market potential would be a modest decline to 6.10 million existing-home sales, according to the model.

How does a rising mortgage-rate environment have so little impact on the pace of existing-home sales? The reason mortgage rates are rising – positive economic conditions – is also causing household income to rise, which helps offset the increase in borrowing costs from higher rates.

Additionally, home buyers can adjust to higher mortgage rates by substituting a lower rate adjustable-rate mortgage for the fixed-rate mortgage or buy a less expensive home. In other words, the housing market is flexible and can adjust to moderately higher mortgage rates without significant impact.

The likely rise in mortgage rates is not the worry for first-time home buyers, but whether they can find something to buy in today’s supply-constrained market.

May 2018 Potential Home Sales

For the month of May, First American updated its proprietary Potential Home Sales model to show that:

Potential existing-home sales increased to a 6.11 million seasonally adjusted annualized rate (SAAR), a 0.8 percent month-over-month increase.
This represents a 63.8 percent increase from the market potential low point reached in February 2011.
The market potential for existing-home sales increased by 4.4 percent compared with a year ago, a gain of 255,100 (SAAR) sales.
Currently, potential existing-home sales is 1.17 million (SAAR), or 16.1 percent below the pre-recession peak of market potential, which occurred in July 2005.

Market Performance Gap

The market for existing-home sales is underperforming its potential by 4.7 percent or an estimated 289,000 (SAAR) sales.
The market performance gap decreased by an estimated 36,000 (SAAR) sales between April 2018 and May 2018.

What Insight Does the Potential Home Sales Model Reveal?

When considering the right time to buy or sell a home, an important factor in the decision should be the market’s overall health, which is largely a function of supply and demand. Knowing how close the market is to a healthy level of activity can help consumers determine if it is a good time to buy or sell, and what might happen to the market in the future. That is difficult to assess when looking at the number of homes sold at a particular point in time without understanding the health of the market at that time. Historical context is critically important. Our potential home sales model measures what we believe a healthy market level of home sales should be based on the economic, demographic and housing market environments.

About the Potential Home Sales Model

Potential home sales measures existing-homes sales, which include single-family homes, townhomes, condominiums and co-ops on a seasonally adjusted annualized rate based on the historical relationship between existing-home sales and U.S. population demographic data, income and labor market conditions in the U.S. economy, price trends in the U.S. housing market, and conditions in the financial market. When the actual level of existing-home sales are significantly above potential home sales, the pace of turnover is not supported by market fundamentals and there is an increased likelihood of a market correction. Conversely, seasonally adjusted, annualized rates of actual existing-home sales below the level of potential existing-home sales indicate market turnover is underperforming the rate fundamentally supported by the current conditions. Actual seasonally adjusted annualized existing-home sales may exceed or fall short of the potential rate of sales for a variety of reasons, including non-traditional market conditions, policy constraints and market participant behavior. Recent potential home sale estimates are subject to revision in order to reflect the most up-to-date information available on the economy, housing market and financial conditions. The Potential Home Sales model is published prior to the National Association of Realtors’ Existing-Home Sales report each month.

Got Questions – The Caton Team is here to help. We are but a call or click away!

I read this article at:

Remember to follow our Blog for the local real estate beat, a pulse on the San Francisco Peninsula at: https://therealestatebeat.wordpress.com

Got Questions? – The Caton Team is here to help.

Email Sabrina & Susan at: Info@TheCatonTeam.com

Call us at: 650-568-5522 Office: 650-365-9200

Want Real Estate Info on the Go? Download our FREE Real Estate App: http://thecatonteam.com/mobileapp

HomeSnap: http://www.homesnap.com/Sabrina-Caton

Visit our Website at: http://thecatonteam.com/

Visit our INSTAGRAM page: http://instagram.com/thecatonteam

PINTREST: https://www.pinterest.com/thecatonteam/

Visit us on FACEBOOK: http://www.facebook.com/pages/Sabrina-Susan-The-Caton-Team-Realtors/294970377834

YELP us at: http://www.yelp.com/biz/the-caton-team-realtors-sabrina-caton-and-susan-caton-redwood-city

Or YELP me: http://www.yelp.com/user_details_thanx?userid=gpbsls-_RLpPiE9bv3Zygw

Connect with us professionally at LinkedIn: https://www.linkedin.com/in/sabrinawendtcaton

https://www.linkedin.com/in/susancatonrealtor

Please enjoy my personal journey through homeownership at:

http://ajourneythroughhomeownership.wordpress.com

Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Effective. Efficient. Responsive. What Can The Caton Team Do For You?

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008

The Caton Team does not receive compensation for any posts and the information is deemed reliable but not guaranteed.

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