The 3 Contingencies You Need to Know About During Escrow

There are three basic contingencies implemented within the escrow period: the home inspection contingency, the appraisal contingency, and the loan contingency removal.

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During a home sale, there are three basic contingencies implemented within the escrow period that you need to know about.

The first is the home inspection contingency. This contingency period allows the buyer to do all of their investigations (home inspection, roof inspection, pest inspection, etc.) as well as review all of the documents and disclosures that the seller has provided them, which they are required to do in California within seven days of accepting the contract. This also gives the buyer time to do their due diligence and feel comfortable that they’re getting the property they first wrote the offer for.

This contingency period normally lasts about 17 days. It can be shortened, though. We normally ask the buyer to reduce the timeline to 12 days because it doesn’t take that long to go through all the paperwork and do all the inspections.

The second contingency is the appraisal contingency. The lender plays a big role in this contingency. When they know that they’re doing a loan on a property, they hire a third-party appraiser to go out and do a valuation on the house to make sure that the offer the buyer wrote for it is actually worth that much money. This way, the bank can feel comfortable and confident when making their loan.

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These contingencies help move the transaction along.

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Sometimes, an appraiser appraises a home for lower than what the contract price is. At this point, more negotiations ensue. Let’s say, for example, that you got a contract at $400,000, but the appraiser appraises the home at $390,000. The buyer can pay cash to close the $10,000 difference, the seller can reduce the price from $400,000 to $390,000, or both sides can meet somewhere in the middle. If the home is priced correctly the first time, however, it should meet the appraisal price. The appraisal contingency lasts about 17 days as well.

The third contingency is the loan contingency removal. This just means that the lender has gotten all the documents they need from the buyer (bank statements, taxes, W-2s, etc.) and they are confident enough in them to release that loan contingency. Normally, this loan contingency happens 21 days after the acceptance of the contract.

These three contingencies exist to make sure the buyer is doing what they need to do to move the ball forward. As always, if there’s a problem, we solve it by negotiating.

If you have any questions or have a topic in mind you’d like to learn more about, please feel free to reach out to me. I’d be happy to help!

5 Keys to Position Your Home Sale for Success

Positioning your home from a marketing perspective is the best way to sell for top dollar. These five things are the keys to positioning your home to maximize your exposure.

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When you sell your home, it's important to position it well from a marketing perspective if you want to get top dollar and sell as quickly as possible. There are five main points to focus on to do this:

1. Pricing. You want to price it as close to fair market value as possible because this will give you maximum exposure from all qualified buyers in the market. Pricing too high, like many sellers tend to do, will give you less traction and less access to qualified buyers. You want to try to get multiple buyers who want to write an offer on your house.
2. Bring in a staging consultant to see if there's anything that needs to be done to the property. When you went on your first date with your spouse or partner, you spent some time to look sharp and get ready to impress them—we want to do the same thing with your house. How you live in a home is not how you sell a home. Some of my clients have simply removed some furniture and excess clutter while others have spent $5,000 staging the home professionally. Each home has different needs.
3. Use professional photography, videography, and maybe even drone video. These days, 97% of buyers will actually start their search for a home online. If your home isn't positioned well visually on the Internet and buyers aren't drawn to the pictures, they probably won't see it in person. Photos are the number one thing we have to do to be sure your home shows well online to all those buyers.
4. Market syndication. This means your listing is pushed out not just to one website, but to hundreds or even thousands of real estate websites. There are many buyers who could come from many places, so you want to put your home in front of as many qualified buyers as possible on a myriad of real estate websites.
5. Make sure you have the back end operations to capture all that lead data. You want to be sure the agent and team you hire have the operations in place to make sure they're converting on the activity your home is seeing from the marketing; it should be proactive, not passive.

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You want to expose your home to as many qualified buyers as possible.

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With these five keys in place, you'll be in the best position to sell your home quickly for top dollar. If you have any other questions, always feel free to give me a call or send me an email. I'd be happy to help!

Don't Skip These 5 Inspections When Buying

If you're buying a home, we recommend investing in five different inspections to get a better idea of the condition of the home you’re buying.

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Home inspections are a vital part of any real estate transaction. Which ones should you get and how much do they cost? These are the top five inspections we recommend when buying a home:

1. Home inspection. This one is obvious; the home inspection will make the overall condition of the property clear. There is no specialty for things like heating and air, but they can identify problems that will need further investigation from someone like a plumber or electrician. It's a general overview, and it's great because you can do a general walkthrough following the two-hour inspection period. This will help you understand any concerns the inspector may have. These home inspections generally cost between $400 and $450, depending on things like your foundation and crawlspace.
2. Pest inspection. This not only checks for actual termite activity, but also dry rot and fungus. These issues, if not addressed immediately, can only get worse. Pest inspections usually run about $100.
3. Roof inspection. This will tell you if there is any part of the roof that needs maintenance or repair, and what the costs would be in order to get a roof certification. Roof certifications normally cost about $250, and there could be some items that need to be corrected in order to get it. The report for the roof inspection is actually free, so there is a lot of value there.
4. Chimney inspection. You just don't know the condition of a chimney, and yet, there could be a lot of issues going on. For $150, you can have a specialist come out for a cleaning, and they'll also inspect the condition of the chimney and the flue and make sure it's all functioning properly and is safe to use. You don't want to start any fires in an unsafe chimney.
5. Sewer line inspection. Not everybody gets this, but it's only $100 and they actually run a camera through the sewer line. Our inspectors have found multiple instances of issues with sewer lines that could have cost up to $6,000. We have been able to correct these issues or get a credit from the seller to fix them simply because most people wouldn't do it.

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These inspections are well worth the investment.

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These are the top five inspections we recommend, but there may be more special inspections depending on the type of property. These inspections are all well worth the investment on a property that's $250,000, $500,000 or more, just so you know what you're buying and that things are working properly, and if they're not, we will ask the seller to take care of them before the close of escrow.

If you have any questions about inspections or about the Sacramento real estate market, give me a call or send me an email. Let's talk soon!

3 Reasons to Sell Your Sacramento Home This Fall

Should you put your home on the market this fall? The answer is absolutely yes, and there are three main advantages to listing now rather than waiting for spring.

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This time of year, I get the same question from a number of potential sellers: “Should I sell my home in the fall?”

My answer is absolutely yes. Fall is a great time to sell, and there are three main reasons why you should put your home on the market now.

1. You will face less competition as a seller in the fall. Why? Most people think that spring is a great time to sell your home, and it is. Still, when your home is on the market and five neighboring homes are on the market, there is more supply and less demand. If there are only two buyers looking in your neighborhood, then only two of those five homes might sell. In the fall, you might be the only one on the market in your neighborhood, so you only need to find one buyer to make that transaction happen.

2. Buyers are more serious in the fall. These buyers have come out of the summer market without finding a home and most of them are looking to get into a new home before the holidays. These buyers are highly motivated people who want to get settled as soon as possible.

3. Interest rates are still phenomenally low this fall. Low interest rates mean buyers still have a lot of purchasing power. We don’t know what will happen with interest rates after the election, so most buyers will want to take advantage of those rates now, which is good news for home sellers.

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Buyers are more serious about getting into a home in the fall.

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As you can see, putting your home on the market in the fall comes with many advantages. If you have any other questions about selling your home this fall or are interested in exploring other real estate topics, please don’t hesitate to reach out to me. I would be happy to help you!

3 Mistakes to Avoid When Buying a New Construction Home

When you buy a new construction home, there are three main mistakes you should avoid:

1. Not hiring a real estate professional. A lot of times there is room for negotiation when you buy new construction - if you know where to look. For example, we have a client who just went under contract and the home is halfway built. I was able to get them $20,000 off the asking price and a $5,000 credit for blinds. There are many nuances in the new construction contract, and you need a real estate agent by your side to negotiate price, terms, and conditions.

2. Not doing research. You need to research the property and the surrounding environment. A lot of new construction homes are in underdeveloped areas; it’s important to know what kind of infrastructure will be going into that area over the next three to seven years. You should also know how that will affect your home’s value and its sellability in the future.

3. Neglecting Paperwork. New home builders have their own contracts instead of the standard California Association of Realtors contract. I have a client who has a new construction contract with 164 pages. There is a lot of fine print to go through. Luckily, I noticed that this contract would have required the buyer to pay $3,000 in closing costs and was able to save them that money. Again, that’s why you need to hire a real estate agent - to catch things you might not know about.

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A real estate agent will guide you through negotiations and mountains of paperwork.

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If you have any questions about buying new construction or about real estate in general, give me a call or send me an email. I would be happy to help you!

5 Steps to Win a Bidding War in the Sacramento Area

There are five easy steps toward making your offer more desirable and winning a bidding war:

1. Write a letter to the seller. Almost everybody loves their home, so when you compliment the seller on things like the decor or the lighting fixtures, you build a rapport with them that resonates far more strongly than simply writing an offer.
2. Include proof of funds in your pre-approval. Show them that you have the cash for your down payment. This will establish your seriousness far better than a lender writing a pre-approval letter vouching for a loan.
3. Make sure your purchase offer is detailed and complete. It’s your agent’s job to verify that all of the information on the offer is filled out completely, including things like the listing agent’s name, office information, phone number, license number, and brokerage number. This proves to the agent representing the seller that you’re going to do the work that you’re responsible for, and that they won’t have to worry about it. 
4. Forget lowball offers! In this market full of multiple offers, a lowball offer might not even be addressed at all. I always advise my clients to write their offer at a price that they feel comfortable with. Decide what your sweet spot is and put your best foot forward.
5. Shorten the contingency period. An inspection contingency, for example, usually takes around 17 days, but it shouldn’t take that long. You can shorten it to 10 and show the seller that you’re serious and want to take the next step into the escrow process. 

If you have any questions or any other real estate needs you want brought to my attention, just give me a call or send me an email. I look forward to talking with you soon.

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Decide what your sweet spot is and put your best foot forward.

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Don’t Let Changing Interest Rates Weaken Your Purchasing Power

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Our purchasing power is affected by rising interest rates. Right now, interest rates are at an all-time low, historically speaking. What that means is that you’re getting a lot more house for your dollar because money is cheap. Today I wanted to discuss the effects of changing interest rates on your purchasing power.

So what does this mean when—not if—interest rates start to go up again? These rates won’t stay low forever. Let’s look at how a rise in interest rates would impact your purchase price.

As an example, let’s say $1,500 is the amount you want to spend on your monthly mortgage payment, and 4% is the current interest rate. How much house can you buy with 10% down? This equates to a $350,000 purchase price.

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Now is the time to buy in case interest rates rise again.

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Now let’s say that six months down the road, interest rates tick up another 1%, but you don’t want to pay more than that $1,500 per month. Your purchase price would now be $311,100. This 1% rise in interest equates to nearly $40,000 less in purchasing power. A 2% rise would bring your purchase price down to $278,550, a 3% rise would bring you to $251,100, a 4% rise would leave you at $227,650, and so on.

This information is important to know as a buyer because you can easily see what a great position you’re in with the 3.5% interest rates in place today. This is also why if you’re a seller, you’re going to have some great exposure with access to such cheap money. Interest rates are low enough that buyers can now afford more house for less money per month.

If you’re thinking about buying a home sometime in the next six or 12 months, now is the time to buy, in case interest rates rise again and lose you over $40,000 off of your potential purchase price.

For more information, please feel free to reach out by phone or email. I’m happy to be a resource for you!

How Making Small Improvements Before Listing Can Net a Large Return

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A lot of my clients wonder what improvements they can make to their house to get top dollar in the best amount of time with the least amount hassle. I have a system and a process in place where I bring in a staging consultant and we create a punch list on how we can position the property without having our client - the seller - spend a lot of money on things that are not necessary.

Our goal is to position that house on the market so that it appeals to the buyers. The staging consultant on our team works really closely with us to determine simple things like doing interior paint or switching out light fixtures. It doesn’t have to be a full-blown kitchen remodel or countertop replacement. Just a few small updates can go a long way!

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Making small improvement before listing can yield a huge return.

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For example, I once came across a property that had sat on the market for 145 days under the direction of the agent before me. It was a smaller home listed at $189,000. I decided to get in contact with the seller after it came off the market, and they decided to put me to work. We then went through the property using our previously mentioned system and decided that only a few small things were needed: a one-room paint job and a professional staging of that room. Most buyers view your house online first so you want it to make a good first impression and stand out with staging and professional photography.

After that $1,700 investment, they were able to list the house for $11,000 more. Not only that, but the very first day it was back on the market, we got an offer above listing price and sold for $202,500. Just by doing these simple things, the seller invested a minimal amount of money and got a huge return.

If you have any questions or comments, please feel free to reach out by phone or email. I’m looking forward to continuing to be your resource and answer any questions that you may have.

The Inaccuracies of Zillow Can Ruin Your Home Sale

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We see a lot of misinformation in this industry and lately, a lot of it has been coming from Zillow. Zillow’s “Zestimate” sounds sexy, but more often than not it fails us by getting sellers’ hopes up about the value of their property by providing inaccurate information.

The Zestimate is found using an algorithm that doesn’t take into account many of the things that give your home value. Nuances like the school district, location, and upgrades that control the behaviors of a buyer are not taken into account by Zillow.

To demonstrate just how inaccurate a Zestimate can be, we have a great example to share with you today. We have a Zestimate for the house of the CEO of Zillow, which was put on the market in July 2015. The Zestimate for his home at that time was $1,491,000.

When the home eventually got listed on the market, it was priced at $1,295,000. That’s already a $200,000 deduction on what his own website said the home was worth! Over time, the market sent the message that the home was still overpriced, and priced reductions followed. By the time the home sold, it was eight months later. The home ended up selling for just $1,050,000. That doesn’t sound like a success story to us, and shows that basing your value off a Zestimate is probably not going to help you get top dollar.

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Basing your value off a Zestimate is probably not going to help you get top dollar.

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Other problems we’ve seen on Zillow include inaccurate or outdated listing information. A lot of times I’ll get a call from a buyer looking at a property on Zillow, and that property will either be sold or not even on the market yet. Our proprietary website solves this problem, as it pulls data directly from the MLS, which is updated in real-time. We want our clients to be able to see every property that hits the market, not just the ones that people choose to post or not post on Zillow.

If you have any questions for us or any suggestions for future video topics, give us a call or send us an email. We are always looking for ways to help you become more knowledgeable in the market so when it comes time for you to buy or sell, you’re ready.

Can You Buy Another Home If You Still Need to Sell Your Current One?

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How can you get your offer accepted when it’s contingent on the sale of your current home? My team and I have done this a million times, and we have a proven system to get the job done.

First, you need to understand your finances. Make sure your loan is squared away. Work with a quality lender who will make sure your pre-approval is good to go. You can even get that pre-approval underwritten ahead of time so that you have an actual approved loan. That will make your offer appear incredibly strong in the eyes of the seller.

Next, prepare your home for the market. Have a staging consultation, do all the light painting and touch-ups you may need, and declutter the property. Make sure your home is ready to go on the market whenever your offer is accepted. That will make your life a lot easier because you won’t have to scramble to prepare your home for the market.

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Make sure your home is all ready to hit the market.

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Make sure you write a strong offer. Don’t just offer a good price. Pay attention to terms as well. For example, the seller may need some sort of rent-back, or they may ask you to pay the closing costs. Understand what the seller wants and write the offer according to what’s important to them.

Finally, you want to work with the right agent who has your best interests at heart. My team and I can make sure you get into your new home even if you have to sell your current one.

If you have any questions, give me a call or send me an email. I would be happy to help you!

Announcing the Launch of Our New Real Estate Blog

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Hello and welcome! We’re excited to announce the launch of our new video blog dedicated to being a helpful resource for real estate and everything that has to do with real estate.

We hope to provide a resource for you to come for any of our knowledge and expertise in real estate through a series of videos and blog posts. We’ll send out two videos per month regarding different aspects of real estate and answer questions you may have about a number of topics. 

We’ll touch on things in your hyperlocal neighborhood, anything to do with lending, interest rates, and anything to do with real estate in general.

What questions do you have? What are you curious about? We want to hear from you! We’re really looking forward to using this blog to communicate and provide value for you!

For any questions you may have or any topics you may be interested in, feel free to reach out via phone or email. We’d love to share our thoughts and expertise with you.