How can you tell when a property is overvalued?

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

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Mark Neuterman
San Francisco
415.885.9986
mneuterman@apr.com

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

Answer: Our real estate market continues to thrive with projects like the new Warriors stadium in Mission Bay. It’s one more example of an area ready for revitalization and development.

There will undoubtedly be some logistical hurdles like traffic, noise and parking to contend with. However, local commerce will certainly benefit from the influx of additional sports fans.

Any opportunity to increase exposure and revenue to our amazing city of San Francisco is advantageous for homeowners and business owners alike.

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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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