Homebuyers Guide

With our tight inventory and ultra-low mortgage rates, it kinda feels like Tesla stock.  One minute you’re in the $800s, and the next thing you know, the same house is in the $900s!

What can buyers do?

  1. Buy location.
  2. Don’t buy crap.

Simple enough, right?

But it’s hard to accomplish both, because the best locations have the oldest homes.

Let’s narrow it down further.

If you can afford a decent location, what else can a buyer do to ensure a smart purchase?

Buy a newer home, and/or buy a one-story home.

Newer: Homes built in the last 15 years typically have modern floor plans with a large open great room and lots of windows that allow for ample natural light.  When you go to sell it someday, it will still be a desirable home without a load of upgrading or maintenance costs to you.

One-Story: Boomers aging in place guarantee that the scant supply of one-story homes will stay tight, and those that do leak onto the open market will be hotly contested.

Here’s a good example.

This sold for $850,000 two years ago, and after a complete remodel it goes on the market for $1,149,000…..and they get multiple offers.  Those who thought they could still buy a nice house in Old La Costa in the $800,000s are really scratching their heads now!  But it had the good location, and the sellers added the new look to clinch a nice boost in value.

If you want to stick with a newer house and/or a single-story house, what are your chances?

Price Range
# Listings
# Built Since 2005
# One-Story
# One-Story Built Since 2005
0 – $1M
28
5
6
0
$1M – $2M
184
45
42
6
$2M – $3M
163
42
54
8
$3M+
266
100
79
24

Buying a newer home or a single-story really looks daunting now, but if you can pull it off, you got it made!

Insisting on a newer home and/or a one-story home will give you maximum assurance that you’ve made a smart buy that will appreciate better than the rest. We can add a few older homes that have been thoroughly remodeled, but they probably still have a floor plan cut up into smaller rooms with low ceilings.

Get Good Help!

Remodel Assistance By Donna

With prices so high now, everyone knows that it’s smart to fully upgrade your house before selling – at least when possible.  But not many sellers do, so buyers get as close as they can and then deal with the rest.  My general rule-of-thumb still applies – expect to spend another $25,000 to $50,000 for upgrading any house you buy!

We are happy to assist our buyers with those upgrades too!

Here are photos of a newer but normal tract house that our buyer thought needed some pizzazz, so Donna coordinated the work before our buyer moved to town.

The TV was on a large, barren wall, and adding an electric fireplace gave it a traditional feel.  But instead of installing it flush, let’s build it out to add some dimension:

This electric appliance kicks out steady heat and has 50+ color combinations!

The kitchen had an off-white antique finish to the cabinets, which looks dirty after a few years. Let’s paint those light gray, change the cabinet pulls, add some modern stools, class up those pendant lights, and install a built-in fridge too:

The master bathroom was base grade:

Let’s ditch the basic wall mirror/medicine cabinet and combo them up instead – with lighting!

How about this new closet by Top Shelf Pull Outs for about $6,500!

Note to self – always take two photos in case someone has their eyes closed!

 

No Mistakes

Remember before the last crash when buyers and sellers were far more cavalier about their real estate decisions?  Why was that?  Because if they needed to move again, there were always a reasonably-priced house down the street or around the corner for sale.

But things sure have changed.

Selling/buying/moving is no longer just something you do casually.  Because of the difficulty, you are probably only going to move if, and when, you decide to make a permanent lifestyle change.

Look at the differences just since this blog has been around:

NSDCC January through September:

Year #Detached-Home Listings Percentage Over $2M Percentage Under $800,000
2005
4,487
19%
28%
2019
3,960
33%
5%

The noteworthy:

There Are Fewer Homes For Sale – In particular, there are fewer high-quality homes for sale that would make it worth it for existing homeowners to move up or down.  In spite of having loads of equity, trying to find a home better than your current home is a major obstacle.

Home Prices Are Higher Than Ever – If you can find a house that suits your needs, the price will be higher than ever.  You have to pay more, qualify for more, and be willing to eat higher recurring costs like property taxes too.

Cost of Moving is High – Gone are the days when you could throw everything you own into a U-haul and move in a day.  Commissions, closing costs, packers & movers, home upgrades, and new furniture will cost you $50,000 to $100,000 or more in any house you buy around the NSDCC.

Competition is Stiff – As a result of the three items above, buyers are very picky and holding out for the highest quality.  Staying on the edge of your seat 24 hours a day can take its toil!

It’s a Market For The Affluent – With only 5% of the NSDCC houses priced under $800,000, it means home buying is only for those who have real horsepower – and regular folks are priced out, unfortunately.

The stakes are high, and making any mistakes now will be very costly.  The worst part is that home prices are moderating (except in Solana Beach), and without an increase in their equity position, those who need to sell shortly after purchasing could incur a substantial hit.

We are in the No-Mistake zone. Get good help!

P.S. The Solana Beach house on Rios that set the all-time non-oceanfront price record in March at $8,250,000 was relisted for $9,750,000…..and it went pending today!

NSDCC Open Houses This Weekend

I went through the NSDCC open-house list and these are my favorites based on price, location, DOM, and agent. They start in La Jolla (four on the oceanfront!) and go north up the coast as you scroll down.

Let me know if you’d like me to create a personal collection for your search!

Making A Contingent Offer

In today’s market, sellers should consider an offer that is contingent upon the sale of the buyers’ home.

If the seller’s home has been on the market for 30+ days, the showings have probably slowed down – and a contingent offer might be the only hope of getting a sale done this year.

Above is a copy of the form we use – the Form COP.  Paragraphs 1-7 are self-explanatory, and Paragraph 8 is where the fun begins.

Buyers include this form with their purchase offer, so they go first on completing #8.

If you don’t touch it, then once the offer is accepted, Paragraph 8A applies – and the seller can cancel this sale within three days if an acceptable back-up offer is received.

Paragraph 8A isn’t favorable to the buyers, so they should check Paragraph 8B and buy more time.

Once checked, the form gives the buyers a 17-day period where they can’t get cancelled, and you can also fill in the blank to dictate a longer period – OR check the last box and lock out all other offers for the duration. The sellers probably won’t go for that option though.

If buyers request a period longer than 17 days, the sellers will probably counter-offer with a shorter time period – and even the boilerplated 17 days might be too long if the listing agent is compelled to throw their weight around and show everyone who the boss is.

End result?

You can probably get a contingent offer accepted today, but it will include the threat of getting cancelled in the first 10-17 days if a non-contingent offer is received.

Key Point?

Buyers making a contingent offer need to have their house ready to sell!

You don’t want to waste the first few days of your exclusive period on house-cleaning and clutter patrol!  Though it isn’t that likely that the seller will get another offer if they’ve already been languishing on the market, you don’t want to chance it.

Buyers making a contingent offer are smart to have their house ready to hit the open market right away – preferably, on the day of acceptance. Plan ahead!

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