What do low interest rates for the foreseeable future mean for Bay Area real estate?

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Hazel Carter
Tiburon / Belvedere
415.730.9445
hazelc@apr.com

Question: What do low interest rates for the foreseeable future mean for Bay Area real estate?

Answer: It is a relief for buyers to hear that interest rates are holding for the time being. However, when buyers think rates could be on the verge of escalating, it does motivate them to purchase. Sellers are certainly relieved, comforted by the concept that money is relatively easy to come by and should continue to keep buyers motivated.

Conversely, when I first began my career in real estate, interest rates were 18 percent — a good reminder that it is important for those considering buying to take advantage of these current rates.

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Interest rate hike delay means what for Bay Area buyers, sellers?

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Tom Dreyer
Mill Valley
415.412.3443
tdreyer@apr.com

Question: Interest rate hike delay means what for Bay Area buyers, sellers?

Answer: If the Fed continues to hold rates at present extraordinarily low levels, it should support and enable the hot local sales market. Low rates provide a clear incentive for all types of buyers as they are able to leverage additional buying power — and are able to borrow more without dramatically increasing their expected payments. With a stable rate, buyers willing to hold a property for at least five years can increase the chances of making money on the eventual sale.

That said, a small, incremental increase in rates by the Fed over several quarters typically will create a spike in buyer activity, while they fear their “buying window” may be closing. Over the long term, it also may price out some buyers until the market becomes more balanced.

The past weeks’ volatility in the stock market, should it continue, is a greater concern to me insofar as consumer confidence is concerned. If consumers do not feel financially stable, it can have a large impact on the real estate market.

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Home warranty: Good idea?

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John Jenkins
Saratoga
408.741.1111
jjenkins@apr.com

Question: Home warranty: Good idea?

Answer: Home warranties are often an inexpensive way to give recent home buyers peace of mind.

The relatively cheap plans will protect homeowners from having to cover the cost of repairs to most major appliances.
Additionally, the warranty will handle all aspects of the repairs — meaning no headache of dealing with different vendors.
However, as with any insurance plan, there is always the possibility you will not need it, and there can be other limitations.

Home warranties will not cover issues determined to be pre-existing. Depending on your plan, they often may choose to repair appliances rather than replace them — no matter how out of date the appliance is.
It might sound simple, but one of the most important elements to getting worth from a home warranty is remembering its value and using it. If you have a problem and try to fix it yourself before calling in the issue, that can void it being fixed through the warranty.

It’s important to look at the specifics of the plan and the condition of the home you are purchasing when assessing if a home warranty plan is for you.

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What are the pros and cons of earthquake insurance?

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Kristan Marie Lynch
San Francisco
415.713.3547
klynch@apr.com

Question: What are the pros and cons of earthquake insurance?

Answer: As a realtor specializing in the San Francisco Bay Area, the topic of earthquake insurance comes up often, especially with first time home buyers. As far as I know, I only have one client that has ever purchased earthquake insurance. Property owners complain that the cost of earthquake insurance is prohibitively expensive and include very high deductibles. However, should your home suffer substantial damage when the ‘big one’ hits and you have earthquake insurance, I doubt you’ll be complaining about those insurance premiums.

Every property has different risk factors depending on where the home is located, when it was built and how it was built. A homeowner would be well advised to weigh these factors and the associated costs before making a decision.

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Do I Still Have A Chance if I’m Not the Highest Bidder?

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David Gunderman & Andrew Raskopf
Oakland Hills – Montclair Village
510.205.4369
dgunderman@apr.com
araskopf@apr.com

Question: Do I still have a chance if I’m not the highest bidder?

Answer: The highest bid almost always wins. Almost.

If you have the ability and the wherewithal to match your competition, there are ways to approach the terms and presentation of your offer to secure an opportunity to prevail in a counter offer phase (but never assume you will get that opportunity as you draft your initial offering.) One of your agent’s responsibilities is to try to find a way to get the seller to give you the opportunity to match or beat the best offer if it is not yours. There are also instances where the seller values something more than top dollar (i.e. a smoother closing, better terms, or they choose to bequeath the home to someone who has tugged at their heartstrings). In addition to assessing value and analyzing disclosures, it is important that your agent find out what the seller values and you should consider including a letter with your offer that builds emotional bridges to the seller while remaining true to who you are.

Lastly, relationships matter in real estate. Lower offers can prevail when the listing agent and seller trust the lender and/or the buyer’s agent to get the job done, especially if the highest offer seems uncertain.

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