Home buyers in Silicon Valley may doubt whether there are still deals to be had or not. Granted, we live in one of the most expensive areas in the world for real estate - so how to shave some off the price?
In Santa Clara County properties are currently selling right around list price - and the sales price to "original list price" ratio is 97%, still pretty close to list. So it doesn't seem like negotiating off of the price is the best way to get a deal.
Here's my take on how to come out financially ahead with your home buying:
Buy during the holiday season December/January
The drawback here is that inventory of available homes is lower during December and January. Most sellers assume that buyers don't want to move during those months. However, any sellers who have their properties on the market are motivated to sell. This can present a possible opportunity for a bargain.
Buy a house that is hard to show
There are different ways that homes become hard to show. Sometimes owners have dogs that need to be removed prior to showings and this is posted on the MLS. Also sometimes the owners are under duress or ill and are only allowing limited showings. Limited showings affect how many people will view the property, thus reducing the amount of competition. Some homes are simply cluttered and unprepared for prime time, even though they are on the market. These are the best opportunities, because if you can look past the owners' stuff to see the potential in the property, you may be the only one that can. Most buyers don't have vision for what a property could become.
Ask your Realtor if they know of off market properties
Homes that aren't on the market will also have less competition. Often home owners who are selling don't want to go through the stress and preparation of putting their property on the market. They may be open to an offer from a capable buyer. We show off market properties regularly, which sometimes result in great finds for our clients.
Look at homes where the deal fell through
Ask your agent to keep on top of deals that have fallen out of escrow. Very often there is nothing wrong with the house - sometimes the current buyer has problems with their financing and can't get together the necessary funding. These sellers are very motivated because they got their hopes up about selling their house. When they do go back on the market, not all buyers are alerted like they would be to a brand new listing. So sometimes it takes the general market awhile to catch on to its updated availability.
Ask your Realtor to proactively find prospective sellers
If you know what exact neighborhood you want to live in - e.g. a radius of 200 homes or less, you could ask your agent to send letters to see if anyone wants to sell. Some agents are even willing to go door to door. Or, perhaps they could send a Facebook ad to a specific zip code. It's worth a try. For this level of service, you'd likely need to sign a buyer-broker agreement which is a good idea anyway. Realtors who have made a commitment to you will be willing to go the extra mile. If you are solely working with one Realtor, closely, they can even call all their industry contacts to find out if they have motivated sellers. Agents even have access to title company demographic information. Through these channels mailings can be constructed to certain subsets of sellers such as owners who have been in their homes for more than 20 years, etc. or homes where divorces have been filed.
Days on market tell the loudest story
Work with your Realtor to review all the homes that have been on the market the longest. There may be something wrong with the house, but it is usually solvable if you have some funds set aside for repairs. And most buyers run from problems - this could be your opportunity. The longer houses have stayed on the market, the more discouraged sellers get. Even receiving a low offer could be a boost for them. There's no harm in trying - most buyers don't have the courage to put in a low offer and if it has been on the market for awhile it's an appropriate time to do so.
Another way to get a deal is not necessarily in the immediate sense. Sometimes the best deals come from appreciation over time. One idea is to look for listings that have a rentable unit (ADU, granny unit, cottage) on the property - over time these will be come more and more in demand. Another one of my favorite ideas for investing well is to buy nearby a train station. For example, think about how Google is going into down San Jose. Of course downtown is super hot right now, but consider also areas a little further out. the Blossom Valleyarea of San Jose is about a 15 minute drive or 15 minute train drive from downtown. Properties in Blossom Valley near the train station will appreciate very well over the long run since it will be a viable option for technology employees going into downtown San Jose. Or, think about how Bart is now going to Tracy, which has raised property values there. Will it ever to Stockton? Some buyers may decide to place a bet that it will, and if it does, they'll be rewarded in spades.
Written by Kelsey Lane, Kelsey Lane & Team Real Estate DRE #01390557