Guest Writer March 28, 2021
Cynthia Peterson is a member of the California.com Recommended Business Program, which highlights only the best businesses in the Golden State. To be featured, each business must be highly regarded, have a unique California story, and make a positive impact in their community.
Buying a home in the East Bay is incredibly rewarding. Here, you’ll be near hiking trails, local eateries, and amazing venues. To top it off, you’re still close to the hustle and bustle of San Francisco! It’s for these reasons and many more that the city-dwellers of San Francisco are making their way out to the suburbs and contributing to the ultra-competitive seller’s market. These are my top tips for buying in a seller’s market.
3 Tips for Buying A House In A Seller's Market
Tip #1 for buying in a seller's market: Envision and manifest your new home
If you know that you’d love to live in an area that has hiking trails within strolling distance, take a drive out to communities like Turtle Creek in Concord. If being close to shops and eateries is more your pace, take BART out to Downtown Walnut Creek. All this is to say, physically go to the communities and truly envision yourself living there. While you’re in these communities, pick up local magazines or hiking maps from the East Bay Regional Parks District. When you get home from your neighborhood tours, dig into these materials and physically put them together.
As important as location is, the home’s layout, bedroom and bathroom count, and lot size may matter more to you. Dig into magazines such as Dwell or Better Homes & Gardens and clip out images of what you envision your next home will look like. Now for the fun part; put all these images and trail clippings together to create a vision board.
Once your dream-home vision board is complete, write down your family’s non-negotiables. (For example, a good school district may be a non-negotiable for you when it comes to buying your home.) Now, write out the item’s that you’re flexible with. Perhaps you’d love to have a pool or a second guest room, but it’s not a necessity. Write out these lists and add them to your vision board.
Before you tour homes, check in with your board and picture yourself finding your home today. After touring each batch of homes with your REALTOR®, go back to your vision board and see if the properties align with what you’d like to see in your future home.
Tip #2 for buying a house in a seller's market: Figure out which loan will best serve you
Before buying a home in a seller’s market, find data for the types of loans that are closing deals in your area. Then, have your REALTOR® check their local MLS to find out what the winning offers were in the past 60 days. Were the homes bought with cash, conventional financing, an FHA or VA loan?
In some markets, conventional financing is being accepted over an FHA or VA Loan, so you want to make sure that your loan-type has a fighting chance of being accepted by the seller. As it has always rung true in the housing market “Cash is king,” so if you are aware that you’re going to be up against cash offers, there are ways you can make your offer just as attractive.
I recently pulled the data for one of my buyers and we quickly saw that only 13.5% of homes in the East Bay cities they were looking in had accepted FHA offers. This made the buyer realize that they were priced out of these locations. We found a few other communities that aligned with their vision and they’ll be purchasing a brand-new home in a similar area. Finding this information does take time, so be patient with your realtor and they’ll help you make an offer that puts your best foot forward.
Tip #3 for buyers in a seller's market: Have flexible timelines
If you aren’t sure how to buy a house in a seller's market, this may be one of the most important tips. Be flexible with your move-in date because in some instances, sellers will need to remain in their homes after the close of escrow. This is typically called a “rent-back” or a “lease-back,” but is known in legal terms as a “Seller Licence of Remain In Possession.” Usually, this time period is shorter than 29 days; if it extends for longer than this, things get a bit more complicated, so you’ll want to chat with your REALTOR® about it.
In most cases, the sellers need to remain in possession so they can move out at their own pace or find their next home. This license term is typically paid for by the seller, based on the buyer’s principle, interest, taxes, and insurance—all of which are provided by the buyer’s lender. However, in this ultra-competitive market, some buyers are electing to allow the sellers to remain in the home for free.
I’ve personally seen a buyer with the second-highest offer—which was $10,000 lower than the highest—be accepted because they were willing to pay for the seller to remain in the home. These buyers were able to be flexible with their timeline because they were renting month-to-month and had the option to move in with family if need be.
When it comes to purchasing a home where a tenant needs to remain in the home after the close of escrow, it gets sticky. Some lenders will only allow these tenants to remain in the home for 29 days, so it’s very important to check with your lender first. The East Bay’s cities usually have their own rental restrictions, so you’ll want to be aware of those as well.
With the pandemic, we’ve seen that some of our supporting businesses—including title companies, recording offices and lenders—are experiencing delays in their timelines. It’s critical that buyers have patience and the ability to stay in their current home up to a week after escrow is due to close. Unless it’s absolutely necessary, hold off on scheduling your moving team for the week after you’re expecting to close escrow. If you need moving companies in a pinch, reach out to your East Bay realtor and they’ll likely be able to send you great, local recommendations.
Vision, data, and flexibility will all be your friends in this competitive market! If you are still wondering whether or not you should buy in a seller's market, reach out to your local East Bay REALTOR®; they’d love to answer your questions and help you find your perfect California home!
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