What to think about
STRATEGY HELPS BUYERS NAVIGATE MARKET
By Sue McAllister
Mercury News

By now you've probably heard: It's a tad easier for home buyers to navigate the Silicon Valley real estate market this spring than last.

With interest rates up compared to last year, fewer buyers are rushing to the market and bidding up home prices. In fact, the number of homes sold in the first three months of 2006 in Santa Clara County was down 19 percent from the first quarter of last year.

Especially in the first half of 2005, many homes sold in 10 days or faster and multiple offers were commonplace, as was big-time overbidding for the most desirable properties. This year, the mood is calmer. Higher interest rates have cooled enthusiasm for real estate -- the national average for a 30-year fixed-rate loan was 6.53 percent last week, up from 5.80 percent a year earlier.

That said, things may be moving more slowly than last year, but the market is not slow -- about half the homes sold in the county since mid-March have gone for more than their asking prices, and half the homes sold in March found buyers in 17 days or fewer.

Here are a few tips to help increase the chances you'll make it through the home-buying process smoothly and sanely.

Know what's available

• Get familiar with what's on the market. Most buyers start their search online, skimming through lists of houses and condos for sale. The Web site www.mlslistings.com shows what is listed for sale in Santa Clara, San Mateo, Santa Cruz, Monterey and San Benito counties. For the East Bay, try www.bayeast.org. A variety of for-sale-by-owner (FSBO or ``fiz-bo'') sites are out there, too -- a couple of the nationwide FSBO sites are www.owners.com and www.forsalebyowner.com. And places such as craigslist.org and eBay have a good number of sale-by-owner ads these days.

In Santa Clara and San Mateo counties, you can also check out www.movoto.com for listings and reports showing how much similar homes sold for.

On many real estate brokerage Web sites, you sign up to receive an automatic e-mail whenever homes in a particular neighborhood are newly listed -- some will also alert you when a sale occurs.

Plan finances

• Get pre-approved for a mortgage before you start serious house-hunting. When you are pre-approved by a mortgage lender, you'll be able to make an offer on a home without having to include a ``loan contingency'' -- a clause in the contract that says, in essence, ``I'll buy your home if I can get a loan for the right amount.'' There's still some competition for the nicest properties, so don't lessen your chances of getting one by neglecting to get your financing plans in order. To help you do this . . .

Seek professionals

• Work with professionals you trust. Whether in person or online, work with a mortgage lender or broker who will inform you upfront about all the fees associated with your mortgage and give you a realistic picture of how much cash you will need at the closing of your transaction. If you don't know a person or company like this, ask friends or co-workers for recommendations, or start your search at www.siliconvalleycamb.com. There, you can select among local members of the California Association of Mortgage Brokers, who have pledged to uphold an ethics code that includes honesty and full disclosure.

You can also start your search for financing by doing research on the different kinds of mortgages at sites like www.mtgprofessor.com, www.Bankrate.com or www.hsh.com.

Also choose a real estate agent with care. You want someone who knows your area, communicates well with you, is respected by others in the business, and whose past buyer clients were satisfied. Again, if you don't know someone like this, ask friends and co-workers who have bought homes for recommendations.

``You'll probably be spending a lot of time on the phone, meetings, etc., until you close escrow,'' said Joe Pollifrone, an agent with Intero Real Estate, so find someone you are comfortable with.

If you don't get automatic e-mails, as mentioned above, and you are working with a real estate agent, tell him or her you want to know about everything on the market that's in your price range and meets your other specifications. These days, some sellers' agents are offering reduced commissions to buyers' agents, and in turn some buyers' agents are less likely to show the properties on which they'd earn less than a standard 3 percent commission. This isn't an ethical practice, but it happens.

Consider pricing

• Determine what the reasonable price is for the property you want.

Some sellers price their homes artificially low, hoping to draw lots of offers. Others may have set their price too high, thinking the market's still booming as loudly as it was last year. You can check on the sale prices of recently sold comparable homes in the area on sites such as www.domania.com, http://realestate.yahoo.com/, www.zillow.com or Movoto.

Now that the market has slowed a bit, said Jeff Hansen of Keller Williams Realty, ``One mistake buyers are making is thinking that the market's shifted and they can offer whatever they want, they can low-ball and get an attractive place.'' On the clean, well-presented homes that are priced correctly for the market, he said, low-balling won't work.

Beat the competition

• If you've got competition, give the sellers what they want.

Some sellers want to rent back the property from the buyer for a month, some want a fast closing or have other stipulations. Find out what they are, and consider meeting those conditions if you really want the place.

``If you can make a personal connection with the seller, all the better, or if your agent is good at making a personal connection with the seller's agent or the seller, that can help, especially in a multiple-offer situation,'' said Rod Cotton, a San Jose resident who's looking to buy a house. He sold his townhouse last fall, and made offers on two places in January, but has not made a purchase yet.

Don't wait too long

• If you find the home you want, act quickly.

Another mistake some buyers are making now is seeing a home they like and assuming it will be available a week or two later, said Anne Walker, a Coldwell Banker agent. Some will, but the nicest ones probably won't.

Walker said that on a recent listing of hers, the house, priced at $675,000, had no offers for the first week it was for sale. Then three offers came along at once, and the place sold for $690,000.

``If any one of those buyers would have moved faster and offered $675,000, my sellers would've sold for $675,000,'' she said.

But some buyers, like Cotton, who is a client of Walker's, want to move at their own pace.

``The inventory's picking up, things are softening, and I'm just waiting a little longer,'' said Cotton, a Lexus salesman. ``I'm going to wait and see if there's going to be a downward trend here. Which would be unusual, but I think it's coming.''

When he finally does decide to act, Cotton admits he may face competition.

``There may be a lot of people waiting,'' he said. ``There might be a lot of money sitting out there.''
Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.

 

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