Tag: San Mateo

Offer Subject to Inspection – What Does That Mean?

As a Realtor I have a whole dictionary for just real estate jargon.  One of the most confusing terms, and often buyers will get the wrong idea about their agent, is “offer subject to inspection.”  So allow me a moment to explain what on earth this means.

“Offer subject to inspection” is a typical hurdle for buyers to overcome when shopping for homes that are tenant occupied.  The term means – the buyer can physically go in and SEE the home AFTER an offer is accepted.  Sounds a little backwards right?

And no – your agent is NOT trying to strong arm you and force you to buy a home without evening seeing it!

Generally this clause is for homes which are tenant occupied.  In order to preserve the rights of the tenant to have the quite enjoyment of their home – the tenant has the right to refuse prospective buyers to come in and see the home.  That is – until an offer is accepted by the seller, then the buyers has the right to inspect the home.

How does this work you ask?  The buyer must write a REAL offer since the terms are binding once accepted.  When the seller accepts the offer, the buyer will have a certain amount of days which is written into the contract to actually go in and see the home for the first time.  If the home is to their liking and the buyer wants to proceed with the contract – they do.  If the home is NOT to the buyers liking – for just about any reason – during the agreed upon days – the buyer will have the right to cancel the deal and walk away without any harm to both buyer and seller.

So you found a home you like – how do you write an offer?  If there are inspections available before hand – it makes our job of writing the offer a bit easier since we have a good idea of what the condition is.  If there are no inspections, and we haven’t seen the home, we drive by and gather as much info as we can with our eyes from the safety of the car.  We write the offer as best we can with the information provided and once the buyer has seen the home and had inspections we proceed with the new information – either by moving forward or discussing the new information with all parties and find a common and suitable outcome for all parties.

As strange as it seems – it happens more than you know.  For some buyers, they cannot imagine writing an offer for a home without ever seeing the home.  For investment buyers, this very typical and generally have no issues writing up a fair offer to get in.  Of course, what happens after a buyer gets to see the home is a far different story.  I have experienced both follow throughs on the contract and recessions – so truly we cross that bridge together when we get to it.

Which is truly at the root of what us Realtors do.  We are the buyers and sellers guides through Real Estate – what can The Caton Team do for you?

Got Questions? – The Caton Team is here to help.  Email us at:

Info@TheCatonTeam.com

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

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3 ways Homebuyers kill their OWN real estate deals…

Hello  again!  Below is a great article I read in Inman News that I thought I would share.  I truly see this often….

Got questions – the Caton Team is here to help.  We are a click away – email us at Info@TheCatonTeam.com

 

3 ways homebuyers kill their own real estate deals

Mood of the MarketBy Tara-Nicholle Nelson

I recently bought a couple of spa treatment packages for a friend’s birthday (as much as a gift to myself as to her, to be sure). The package included a pedicure and a massage for the price of the massage, but had a bizarro restriction that required I pick the gift cards up at least one day prior to spa day.

The problem: The spa was across a bridge from my town. Despite my very best calculations, I hit unexpected traffic and it took me an hour’s drive just to pick them up.

It’s a good thing for the spa that I was literally stuck on that bridge, unable to turn around; otherwise, that would have been an undone deal. I was very clear that the value of my hour far exceeded the value of those two “pedis.”

In the end, the conditions I had to surmount to take advantage of the bargain negated the value of the deal — and then some.

And that happens much more frequently than you’d think in the world of real estate. Today’s ridiculously low prices and interest rates, combined, seem like the perfect storm for finding a great deal.

But some buyers run into — or even unwittingly create — circumstances in an effort to cash in on the bargain that deactivate or diminish the full value they otherwise stand to gain from buying at the bottom of the market, for both home prices and interest rates.

Here are three ways homebuyers are defeating their own deals in today’s market:

1. House hunting too long. As many as 60 percent of the homes for sale in some markets are short sales. Many other listings are bank-owned (also known as real estate owned or REO) properties, and those homes tend toward two extremes: terrible condition, or so nice at such a low price they receive multiple offers.

Even the nicer, nondistressed homes on the market can end up in and out of contract over and over again due to appraisal or other lending-related issues.

As a result, it is not at all bizarre to hear homebuyers today say they’ve been house hunting for a year, 18 months, even two or three years. When you house hunt that long, you become susceptible to house hunt fatigue, which causes irrationally extreme overbidding out of sheer exhaustion.

Alternatively, it can cause you to settle for whatever house you can get, even if it doesn’t actually meet your needs — then spend the next 10 years obsessively spending to upgrade, improve, repair and furnish the place to try to make it more like the home you actually wanted.

Both of these outcomes negate and deactivate the bargain you stood to score.

To avoid house hunting too long, it’s uber-important to get and stay clear on the differences between what you want and what you need, and to work with a local real estate professional you trust.

Look to your agent to get and keep your expectations centered in reality, so you can make more strategic decisions throughout your entire house hunt, like house hunting in a price range where you’re likely to both find homes that will work for your life and be successful in your efforts to obtain one.

2. Making lowball offers way too low. Overbidding seems like an obvious way to cancel out the bargain potential of your deal. But making excessively low offers — offers sellers couldn’t afford to take if they wanted to — can have the very same result.

Buyers who think they can operate strictly on the basis of buyer’s market dynamics — without realizing that most sellers will need to make enough to pay off their mortgage or at least receive the fair market value for their home — are cutting off their own noses to spite their faces, all in the name of trying to score an amazing deal.

Note to “lowballers”: If you don’t actually secure the home, the superlow price you offered is no deal at all.

3. Freak-outs, stress, drama and mayhem. Once was, it was mostly the buyers uneducated about the homebuying process who tended to freak out and stress the most, especially at the top of the market. These were the folks who found themselves defeated at every turn by buyers who knew what they were up against and were prepared to make their best offer on their first offer.

Fast forward, and now the norm is for buyers to spend much more time reading up on what to expect, but the inundation of information can create brand new mindset management challenges.

Almost every buyer is stressed about whether they can qualify for a loan, and about buying into a down market. Some buyers try to apply national headlines about home prices being depressed to the superlocal dynamics of their neighborhood market.

This is unwise if you happen to be, for example, trying to buy a home in the boomtown real estate markets of Silicon Valley. Others go the opposite direction and deny that the basic truths about, say, buying a short-sale listing will actually apply to them (attention homebuyers: buying a short sale usually takes a long, long time).

The emotional freak-outs that result from having your expectations shattered, sometimes brutally, in the course of buying a home often lead to panic-based and fear-based decisions, which can be costly in the short and long term. Additionally, the stress itself can take a toll on your ability to be productive at work, and can even impair your relationship with your mate, neither of which are worth any deal you think you stand to strike.

Again, managing your expectations by working with a trusted broker or agent you feel comfortable relying on to understand the market in your neck of the woods and the type of transaction you want to pull off is essential to downgrading the role emotion plays in your real estate decision-making.

Got Questions? – The Caton Team is here to help.  Email us at Info@TheCatonTeam.com or visit our website at:   http://thecatonteam.com/

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

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Please enjoy my personal journey through homeownership at:  http://ajourneythroughhomeownership.wordpress.com/

A Quick Review on Short Sales

SHORT SALES

What is a “Short Sale”?

A short sale is a property that will go into foreclosure if not sold before the three month “non-payment mark” and “notice of default” is filed. When an owner is in distress and they know they can no longer afford their mortgage    payment – they should contact their Realtor and their bank immediately to discuss the possibility of the bank receiving less than what is owed. The term “short sale” refers to the agreement that the bank will accept less than the amount of the loan they have on the property. This course of action is the last chance an owner has to get out of the loan and keep their head above water. A bank will not agree to a short sale if the owner has other assets they can   liquidate to bring the loan current.

Why Would a Bank Accept a Short Sale?

Banks would much rather not hold foreclosed property. And in a short sale they will probably receive more money than at a foreclosure sale. However, not all owners will qualify for a short sale agreement. The circumstances around a short sale vary. For example, perhaps through a job loss or other reason they have been unable to make regular     mortgage payments and that balance due plus late fees are added to the total loan amount. Suddenly the owner may owe more on their loan than the home can sell for. If the owner forecasts that they can no longer manage their monthly payments they will need to contact their bank in advance to    begin negotiations. However, the owner cannot have any other assets available. If so, those resources will have to be exhausted first before the bank will agree to a short sale. In this case, before the 3-month mark of    foreclosure – the owner can place the home on the market and see how much they get. The home will be listed by a Realtor and advertised as a short sale – where time is very much of the essence. Interested buyers will need to act quickly in order to purchase before foreclosure proceedings begin.

Another reason a short sale can become an option is when, due to market changes, a seller owes more on the property than it is currently worth. For example – Let’s say the owner purchased the home 2 years ago and paid top dollar for it. Since buying a home is a long-term investment; 2 years generally doesn’t give the owner time for the property to appreciate. Suddenly, for whatever reason, they are unable to make their monthly mortgage payment and cannot sell their property for what they purchased it for. They find themselves “upside down”. Meaning the market has changed and the value of the property has dropped from where it was when they purchased it. As professional Realtors – we advise our clients when purchasing a property that they will need to hold their investment for a minimum of 5 years to see appreciation. In this particular case, no matter what, the loan on the property is greater than what the home can be sold for. If the bank agrees, the home will be listed by a Realtor and advertised as a short sale where interested parities will need to act quickly before foreclosure proceedings begin.

Why Should a Buyer Consider Purchasing a Short Sale?

Because the clock is ticking on short sales – it can be very advantageous for the new buyer to purchase under these   circumstances. Short sales are no fault of the property. Your Realtor will do a comparative market analysis to inform you of current home values to help you better decide your purchase price. Although disclosures and inspections may not be available for the property – the opportunity to perform inspections is allowed by the bank. Time is of the  essence, so a buyer will have to act quickly. The bank has agreed for a limited time to take the highest offer received – there is the opportunity for the buyer to purchase the property at below market value – thus having instant equity.

Before you get involved with a short sale purchase or sale – consult a Real Estate Attorney and a professional Realtor.

For all your real estate questions please contact The Caton Team  Email:  Info@TheCatonTeam.com  Website:  http://thecatonteam.com/

 

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To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!

A Quick Review on Foreclosures

With all the media coverage surrounding foreclosures, auctions and short sales we hear our clients ask for clarification every day. So here are some quick answers to these confusing questions. Please feel free to contact us to explain this further by email at Info@TheCatonTeam.com

FORECLOSURES

 How Do You Fall into Foreclosure?

When an owner can no longer afford their mortgage and stops making payments all together – they are waiting for the bank to foreclose on them. (Highly unadvisable course of action – contact your Professional Realtor for advice if you can no longer pay your mortgage immediately!) After about 3 months of non-payment, the bank will file a “notice of default” and inform the owner that unless they bring their account current immediately – they will be foreclosed upon. Meaning, the owner will be evicted, their credit ruined and the bank will take possession of the property. Now the bank owns the property and needs to sell it. They will either list the property with a Realtor and sell it as a “REO” – a bank owned property – or they will sell the property at auction to the highest bidder.

How Do You Buy a Foreclosure?

For those who are inexperienced in Real Estate – buying a foreclosure at auction is NOT the way to start investing. Generally, when the property goes to auction – the buyer must have liquid assets to purchase the property immediately. Generally one cannot acquire a loan to buy a foreclosed property at auction. Another concern is disclosures. A      property being sold in a foreclosure auction usually does not have inspections or disclosures informing the potential purchaser of the condition of the property or the condition of title. A drive by of the property is allowed and rarely there is a date to view the property where the buyer can bring their own inspectors to view the home at their own cost. This type of transaction is truly a “Buyer Beware” scenario.

However, instead of the bank auctioning off the property – they may list the home with a Realtor and sell it as a “REO”. In this case, the home is placed on the market like any other home sale and available to view with your     Realtor. Usually there are no disclosures or inspections of the property – if the buyer were concerned they would have to pay for their own inspections to determine the condition of the home. In some cases limited disclosures are available to the buyer – nonetheless, this is still a “Buyer Beware” scenario and as professional Realtors we advise all our clients to go forward and pay for their own inspections before they write an offer – or incorporate time for inspections in the offer.

Final Thoughts on Foreclosures

Though they sounds so tempting on TV, foreclosures can be a messy business and we haven’t even touched on the issues of other lien holders, tax liens, other loans remaining on the home or “investor” purchase issues. Before you get involved with a foreclosure purchase – consult a Real Estate Attorney.

For all your real estate questions – contact The Caton Team Email: Info@TheCatonTeam.com Website:   http://thecatonteam.com/

To read my personal journey through homeownership – visit http://ajourneythroughhomeownership.wordpress.com/  Enjoy!