Oakland Real Estate News

Buying a home in a Seller's Market can generally be challenging. Buying a home in a Seller's Market in closer proximity to tech boom cities in which your desired city is in top demand can...... well let's just say you must stay confident, creative, and willing to sacrifice. Selling a home in a Seller's Market should be easy, but can be complicated as well if the proper expectations aren't set and greed sets in. 

The Oakland real estate market has always had desired pockets scattered between undesirable areas. This has evolved, and now some comparable homes in the same neighborhoods are selling at up to $200k differences in price (approximately the highest I've seen). In measuring the differences most times, the edge of the higher priced "sold" home may just be nice upgrades/originals and a spectacular stage job. These "sold" price differences can make it frustrating for realtors when looking for comparable homes for a client's Comparable Market Analysis. Some buyers are so frustrated with writing offers just to get out bid that they want to go for it with a very high offer over asking price. The problem that can stem from writing an offer too high however is the appraisal will come back short of the offer price, which will require the buyer to make up the difference. The same frustration sets in for the seller most times when they are excited by the high offer only to get a call from their agent about the buyer wanting to renegotiate down to the actual appraised value. In those cases sometimes seller greed sets in and the property sits on the market only for the listing to expire.

The truth is, some homes (sold price) probably just shouldn't be used as comparables when it comes to creating a CMA (at least in the Bay Area). There are exceptions to this, some that I use each time I create an analysis. For instance, when I create these reports I most times always do two:

One of them being an analysis that includes homes on a top tier (well staged and very nicely upgraded with close comparables such as rooms, baths, and square footage), a mid tier (not so upgraded but originals and comparable features), and a lower tier (tenants, fixer-ish, older looking, and not great condition). If I am unable to find these within a close radius I spread out a bit and sometimes increase room amounts and square footage until I get what I need. The most important thing in this case is letting your clients know not to use the value of the analysis given by the software. Using the method above will have your final numbers somewhat inaccurate but to a certain advantage. This allows your client to see an analysis of a few kinds of properties (condition varying) with similar features. Seems elementary, especially to experienced realtors, but in Oakland this is almost a must.

For the buyer this will help them strategize their buying in being able to be creative with directional ideas to stay in budget with a mid tier or fixer-ish purchase, or consider spending a little extra for a finely renovated home that already shines.

For the seller this will enable them to equally strategize their sale with a possible 203k/similar renovation loan or out of pocket spending to deliver a polished/upgraded home to the market that would sell for more, or sell as is at an acceptable price still with a usually quick turn around.

The other analysis is what I refer to as my Quick and Dirty Comps. With this analysis I basically search out homes with the closest comparison to the subject property condition wise, square footage and sold for square footage, bedrooms and baths etc. Without the use of condition tiers like above this one gives a better perspective of value and should give the buyer/seller a more precise idea of what the subject property is worth. 

Individually, most everyone has their own ways of comparing homes as realtors, appraisers and even sellers and buyers. There can be good and bad comparisons sometimes done by realtors and even appraisers, some traveling from a surrounding city that are not familiar with the local real estate market. If they bring their area specific method from the real estate market in their city 20 miles away, you might get an inaccurate valuation. This can drive any side in the transaction CRAZY if it is from the appraiser, so don't be afraid to dispute an appraisal with your own information. 

The truth still lies in the fact that the fair market value is usually determined by what the market is willing to pay. In the case of the Bay Area there are many residents with higher and growing incomes willing to pay amounts way over appraised value. With that being said evolution of different areas is occurring and we are experiencing extensive change. If you will be buying or selling in today's Bay Area market be sure to do your homework on the trends. 

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Inexperienced and even some seasoned buyers have anxiously asked "How long does it actually take to buy a house?". In truth there is no perfectly right answer. Being that everyone (both on the agent and client side) is different, the experience varies. Funny enough it is not always people's buying power or pre-approval amount either. Different responsibilities come in to play when making a purchase and everything doesn't necessarily fall on the realtor. Buyers are encouraged to be as involved as possible to ensure they get what they want. And that doesn't mean taking over as the realtor buyer and bombarding your realtor with Zillow Zestimates and Trulia  homes either.

Be Prepared to Buy

As an interested buyer, if you don't already know that getting pre-approved by a lender is one of the first things you must do, even just to write an offer to purchase in most cases, you do now. But that is not all if you really want to be prepared. To have a few extra bases covered consider:

A few months to at least a year prior to getting pre-qualified start taking steps to raise your credit score. There are a number of things one can do to strengthen their credit score in a short amount of time. I won't go into much detail in this post but to name a few; make sure you have checking and savings accounts with average daily balances and not $0.00 routinely; if you don't have any, get a credit card or two being sure to continuously pay down your balance to 30% at most of your max credit limit each month; start a department store credit line at Macy's or a like store and keep the credit balance at most 30% of the max, DO NOT GO OVER 30 DAYS WITHOUT PAYING ANY CREDITOR INVOICE.

Start a savings plan in which you are putting extra money aside to assist in your buying expenses such as down payment, inspections, closing costs, appraisal, title and escrow fees etc. It's not cheap buying a house and the more money the better. When you start your savings plan don't be frugal. Without a down payment assistance program you normally need to have at least 3% of the purchase price, and that is only the down payment.

Figure out a good schedule with your realtor to routinely go and look at homes.

Go and Look!

Aside from paperwork and qualification, a buyer needs to realize the emphasis that needs to be put on the basics, which include footwork and actually going to look at homes. We are all very busy and that is to be understood from all angles. But when it comes to the decision to buy a home in today's extremely HOT market one needs to realize that regardless of how busy people are, the smart ones go after one of their most prized possessions aggressively. If you don't go and see homes then you won't get a home (unless you are an absentee investor buyer or have some other situation going on). This means that whenever your schedule permits and your realtor has shared homes that interest you, you should go and check them out. If you are working nights go during the day and vice versa or even try going at lunch. Now in many cases offers will not be accepted until a specified date. If this is the case then fine, you have an excuse. Otherwise do not hesitate to get out there. These days homes go fast, and sometimes even sell below a price that you would have offered.

Thoroughly Study Your CMA and the SOLD Trends in the Area Before Determining Your Offer Price

I know it sounds elementary but I've noticed where a thorough market evaluation isn't being done prior to submitting offers for many buyers. It has become common practice to write offers over asking price in the Bay Area market and people have been under bidding for high priced fixer uppers for as long as I've known. However, research of the present market is still pertinent to coming up with the best and most competitive offer price. Our market is definitely very tricky right now, especially in the East Bay as sold prices are going well above the appraised value in many instances. With just that in mind buyers do not want to bite off more than they can chew and should have knowledge via their Comparative Market Analysis and any other reports that may be provided, of what has recently sold and what can likely be expected when the appraisal comes back. Good realtors should be able to guide buyers and decipher between a situation where there was a buyer with deep pockets on a SOLD home that was able to afford to make up the difference in appraised value and offer amount or not. Definitely do your homework as time is precious. 

Not much in decent areas is being sold for less than $400,000. And anything above $417,000 would be considered a jumbo loan which is a little more strict on terms and for some harder to qualify for. This means that many people buying these homes are getting loans for up to $417k and financing the rest with their own cash reserves or other assets. The harsh creeping reality of our market, at least in the East Bay, now is that you MUST have some considerable extra cash to put down or else you are almost certain to be outbid. The good thing is that the new wave of buyers in our market more and more have higher incomes. The bad thing is current long-time residents are being displaced.