5 Things Every Homebuyer Needs to Know About New Construction

If you want to buy a new construction home, there are five important things that you need to know.

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Buying a new construction property is very different from buying a resale property. There are five things that every homebuyer needs to know about new construction:

1. New homes may not be listed in the local MLS. This is important because you may not know all the new construction inventory available. You should connect with your local real estate agent who can give you insight as to what new construction homes are available and what new communities are coming into the area.

2. New construction homes are often sold before they are built. New construction communities may have floor plans available, but you won’t even see that inventory when you are ready to buy in a new area. If you are looking at a more established community, that’s why there are only a few homes available for sale, if any; the homes were sold before they were even built.

3. The first buyers may get the best discounts. New construction builders have relationships with lenders, and there are incentives available for you, especially if you buy while a new construction community is still in the first phase. They may offer credits, discounts for rates, or even some kind of credit towards your closing costs if you work with their preferred lender.

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The builder may give you a design center credit rather than coming down on the price.

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4. Builders don’t have a personal attachment to the home. Sometimes, it’s just business. The numbers have to make sense for the builder. If you are buying in a newer community that hasn’t sold a lot of homes yet and there is still a lot of construction going on, the builders may work with you more on pricing. As time goes on, those prices will go up through the different phases. There will be fewer discounts available as demand grows and inventory shrinks.

5. Discounts may be available in the form of upgrades. When you work with a real estate professional, we know how to negotiate the best deal for you. The same is true when you buy a new construction home. For example, say a house is listed at $400,000 and the builder doesn’t want to go down on price. The builder may give you a design center credit so that you can pay for upgrades. For example, they may give you a $30,000 credit that you can use to upgrade your countertops, flooring, or lighting.

If you have any other questions about buying a new construction home, please feel free to reach out to my team. We would be happy to answer any questions that you may have, and we look forward to talking to you soon!

What Happens During the Inspection Contingency?

What is the home inspection contingency, and why is it so important? I’ll go over four key points for you today.

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The inspection contingency period is by far the most important contingency when buying a home. There are four key points that you need to know about in order to understand this process a little better.

1. What is the time frame allowed for the standard contingency period? Usually, the contingency period lasts 17 days. In our current market, the inspection contingency period has dropped to 14, 12, or even 10 days depending on the property and how much activity is on it. Shortening the inspection contingency period helps the transaction move along at a faster pace.

2. What is inspected? There will be a general home inspection, pest inspection, and roof inspection. If you are buying an older home, you may want to get a sewer line or chimney inspection so that you understand the condition of all parts of the property. In addition to reviewing the physical condition of the property, you will also have the opportunity to review all seller disclosures during this time. Since they have lived in the house, they know a few more details than the inspection will review. For example, they’ll be able to tell you if there was a flood or fire in one of the rooms.

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Pay attention to major issues or safety concerns.

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3. What happens if I discover something? In other words, what happens if something comes up on the home inspection report? Once this happens, you can submit a request for repairs asking the seller to correct the issue before close of escrow. Pay attention to any major repairs or safety concerns. Don’t ask for small, cosmetic issues to be handled. If you noticed that the living room needs a fresh coat of paint or that you want to replace the countertops, take care of that on your own. The seller can agree to take care of all, some, or none of the repairs. From that point, it is up to you to decide how to proceed.

4. Don’t submit a laundry list of repairs to the seller. Again, highlight items that are important, like major roof repairs or safety concerns. Don’t ask the sellers to do something that you could easily take care of on your own, like replacing a light switch. If you do, you risk offending or irritating the seller, which could make negotiations more difficult down the line. Include bigger repairs so that the seller will take your requests seriously into consideration.

If you have any other questions about inspection contingencies or the home buying process, just give me a call or send me an email. I would be happy to help you!

How Can You Find a Home in Today's Market?

If you’ve been in the market for a house, it’s important to know where to look. Today, I’ve got three strategies that we use to help our clients find their next home.

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In this low-inventory market, how can you find a home? Today, I’ve got three strategies that will help you achieve just that. These strategies are ones we use personally to help our clients. In fact, this year we’ve helped three different buyers find homes that hadn’t even hit the market.

Before I talk about those strategies, though, it’s important to note another component that will be key to your success: having a refined search in place. During your home search, you should narrow the homes you’re looking at by deciding what neighborhoods you’re interested in and what criteria is important to you in a property. 

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Finding the right home is all about knowing where to look.

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Once you’ve got a more narrow idea of what you’re looking for, we can implement the following three strategies.

1. Utilize agent relationships. We have access to different portals, groups, and agents who are promoting “coming soon” listings or pocket listings. On our team, we utilize our relationships with various agents in order to dig up listings that not everyone knows about. 
2. Engage in outbound prospecting. This is something we do a lot of. If you know where you’re interested in living, we have systems and tools that allow us to extract information from that specific neighborhood. Whether it is by calling or going door to door, we know the most effective ways to gather leads on inventory for our clients.
3. Search our database of expired or withdrawn listings. We have data going back about five years from listings that have expired or been withdrawn from the market. Using this data, we can call those sellers and inquire about their properties. By finding out whether they are still considering selling, we are able to find homes for our clients that not everyone on the market has already seen.

When you are looking to buy a house, having access to all of the inventory available will make a world of difference. Finding the right home is all about knowing where to look.

If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.

Tips for Winning a Multiple Offer Situation as a Buyer

If you find yourself in a multiple offer situation as a buyer, there are a few ways you can ensure that your offer comes out on top.

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If you’re on the hunt for a home in this market, it can be tough. There isn’t a lot of inventory available and there is a lot of competition from other buyers in many price points. How can you make sure your offer percolates to the top in a multiple offer situation?

The first thing you can do—which is something our team specializes in—is work with your agent to reach out to the seller’s agent and ask them what’s so important to their client about selling their house. The reason for this is you want to match your offer to the motivation of the seller. Sometimes they want to sell the house as fast as possible; sometimes they need a 60-day rent-back agreement after it sells. If you don’t have that communication to understand what’s important to the seller, you won’t be able to position your offer accordingly. 

The first thing you want is for your agent to reach out to the buyers' agents and ask for their clients' highest and best offers. You want to let them know that it might be their final chance to put their best foot forward.

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Match your offer to the motivations of the seller.

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Next, incorporate a letter to the seller and send it to them. This means writing a personal, heartfelt letter further expressing your interest and why you see yourself living there. We’ve been able to get many clients’ offers accepted that were priced below the competition based on these kinds of letters. 

On our team, another thing we like to do is focus on agent relationships. We have a strong reputation for working hard for our clients. We negotiate on your behalf and make sure we’re doing everything that we agreed to do up front. This way other agents in our market know we perform our tasks and duties and do our job and it makes them more comfortable accepting your offer and moving forward with us. 

Finally, ask yourself—what is the most you’re willing to pay? If your offer doesn’t get accepted, you don’t want to be kicking yourself the next day knowing that you would’ve been willing to offer more. At the same time, you want to make an offer that won’t make you feel like you overpaid if it did get accepted. Everyone has their sweet spot, so that’s up to you to determine. A lot of times, you only get one shot though. 

If you have any questions about how to win a multiple offer situation as a buyer in our market, please don’t hesitate to reach out to me. I would 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 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!

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!