How can you tell when a property is overvalued?

Agents SOUND OFF

 

Matt Tenczar
San Jose – Almaden Valley
408.605.8124
tenczarteam@apr.com

Question: How might Warrior arena in Mission Bay affect our real estate market?

Answer: My initial response: “Is there such a thing in the Bay Area?” Consider Santa Clara County, where only 545 single-family homes and 171 condos/townhouses are actively for sale and the average home sells at 102 percent of its list price. Is it possible there might not be such a thing as an overvalued home? I often tell buyers when they ask me if a home is worth it that if it isn’t today, it will be tomorrow.

Having said that, the question remains how do you tell if a home is overvalued. It turns out there really is such a thing in the Bay Area. When looking at the statistics of home sales, the average home takes 35 days to sell, so that means not every home sells in one week and receives multiple offers that are hundreds of thousands of dollar more than the list price. So how do you tell? If you are a buyer, you start with looking at the days on market.

Any home on the market for more than 30 days possibly has something wrong with it, and whatever the “it” is, the price will be part of it. Homes that have been on the market for a long time sell for a lower price. So I would define an overvalued home as one that’s been on the market without receiving any offers for more than 30 days.

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

Agents SOUND OFF

 

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?

Agents SOUND OFF

 

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?

Agents Sound Off

 

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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How much should clients believe what they read in online reviews about a Realtor?

Agents Sound Off

 

Rainy Hake
Executive Vice President
408.741.1111
rainy@apr.com

Question: How much should clients believe what they read online about a Realtor? How can they determine fact from fiction in online reviews?

Answer: Without question, asking friends, family or neighbors that you trust about an agent will always give you a more accurate impression of an agent than online reviews. Online reviews of real estate agents are often tricky to sort through. Unlike a restaurant that deals with thousands of customers a year, agents often deal with only a handful. As a result, because the sample size is so low, it’s very rare to get a complete picture based solely on online reviews. To add to this, sometimes the reviewers aren’t even the clients of the agent; they are just people who interacted with them in another capacity. While some sites (Zillow and Trulia) verify that the reviewer was involved in a transaction with an agent, many sites like Yelp, Google Places, and reviews on Facebook pages feature no such verification.

I would say that if there are numerous reviews and a pattern emerges that fits with your previous perceptions and interactions with an agent, they may have some credibility – both positive or negative. It also never hurts to ask the agent about any reviews you have concerns about; how they respond might shed some light.

When all else fails, choosing an agent that is affiliated with a respected brokerage with a professional, solid reputation in the community is typically a safe bet.

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