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Buyer Frequently Asked Questions

What do you think will happen to the real estate market? 
Nobody can answer that question with any degree of certainty.  There has never been a national "real estate bubble" as is now occurring.  When prices have fallen in previous times, it has been due to local economic forces and job losses, that caused many people to move out of the area.   Many people over the last few years were able to obtain financing that, based on their income and credit, should not have been as easy to obtain.  That has caused prices to rise too quickly, and we're seeing the result of that now in depressed prices and foreclosures.  Currently, most of our area values have retreated to where they were in 2004 or earlier.  Prices in any given area have always been tied most closely with incomes, so I think we're likely to see that correlation come back into effect.  With all the economic uncertainty out there, it's impossible to know when the market will bottom out.  Like many previous downturns, we won't know where the bottom was until after it has passed.  Instead of asking if it's a good time to buy, I'd suggest looking at your own individual situation - Are you planning on staying in the area long term?  Can you qualify for good financing?  Do you have sufficient funds to weather the continued downturn?  If the answer to those questions are "yes", then you're in a good position to buy.  No matter the market, there are always better deals to be had - sellers that need or want to sell quickly, foreclosures and other opportunities.  The best properties sell in a matter of days or weeks.  All the properties you see on the market for over 2 months are likely overpriced, have some deficiencies, or both.

Can I get a great deal on a foreclosure?
There's a few different opportunities regarding foreclosures, depending on where the people are in the foreclosure process and some things you should know about the process itself

1.) When a homeowner misses a payment and falls more than 30 days behind, the lender records a notice of default,  Notice of Defaults are public records, and you can usually view these at web sites such as www.realtytrac.com.  You can, at this point, make an uninvited offer to the homeowner to see if they are interested in selling. The trouble is that you generally aren't going to get to see the property beforehand, and it's possible the seller's loans are higher than the price you're willing to pay, making this very difficult.

2.) When a bank actually reaches a point where it forecloses on a homeowner, they will usually begin with an auction of the property on the courthouse steps. (Or other publicly disclosed location) This is where you can find a deal, but they are generally few and far between. The minimum bid is usually the amount owed to the lender, which again in many cases in this market can be more than the market value of the property, so the majority of homes don't get any bids. If you do want to bid on a house at a courthouse auction, there is no purchase agreement, no inspection of the property, and you must have a cashier's check for the purchase in hand - so it's not very practical for most people who don't have a lot of money, and a lot of experience in this area. You also generally have to be willing to do a lot of fix up work.

3.) Assuming a property doesn't sell in a courthouse auction, it becomes "bank owned". At this point, most banks hire real estate agents to list and market the property like any other seller might. There are agents that specialize in bank owned properties. This is a more practical time to buy foreclosures, as you do have the protections of doing inspections and have time to finalize a loan on the property, although banks are much tougher to negotiate with than the average seller, and have lots of contract addendums limiting their liability. You also won't get any property disclosures, as banks are exempt from the typical disclosures required by sellers. The banks are becoming more flexible on pricing, and there are definitely some good deals to be had. However, there is nothing special or secret about the listing of these homes as they are listed on the MLS like all other available properties, so there is no secret list of foreclosure properties out there that you're not getting to see, Another thing about foreclosures that is pretty consistent is that they tend to be fixer-uppers, as people that are losing their homes to foreclosure aren't real big on keeping them in good condition.

What time of year is best to buy?
If there is a good time of year to buy to get the best deal, it would be between Halloween and Christmas.  Sellers that are generally selling during this period are usually doing so out of necessity - job transfer or other family reasons are most likely - and are usually more motivated to finalize a sale.  Each year, in our marketplace, the median home price dips slightly in the 4th quarter.  Inventory is typically lower during this period, so the number of options may be more limited, but if you can find what you're looking for, you're likely to have less competition from other buyers and find yourself in a better negotiating position than in other times of the year.

What areas appreciate more than others?
Areas that are convenient to both mass transit (BART) and  to freeways, as well as areas with quality schools, are most popular with buyers and tend to have somewhat higher appreciation rates over the long term, as well as holding their value better when there is a downturn in the market.  That has been the case so far in that areas of Concord and East Contra Costa, have seen steeper price drops than much of Walnut Creek and central areas. 

Do condos & townhouses appreciate as much as detached homes?
Condos & townhouses in our area have actually appreciated at a slightly higher rate over the past few years than single family homes.  This is mainly due to the fact that they are generally located in very convenient locations for commuting, and their price points are very attractive to first time buyers.  For that same reason however, during a downturn, they can be harder to sell, and may experience larger price drops in that situation, as first time buyers are more likely to be dissuaded from buying in a buyer's market.  For more information on purchasing a condo/townhouse, please visit our condo/townhouse information page.

How does an agent representing a buyer get paid?
When a seller lists a property for sale with a real estate brokerage, they agree to a specific commission percentage to be paid upon a successful sale of the property.  In turn, the listing brokerage markets the property on the multiple listing service, making it available for any member agents to access the property, and show it to buyer clients of theirs.  The listing brokerage offers any cooperating member brokerage representing a buyer a percentage, usually 50%, of the total commission rate being paid by the seller for representing the buyer through the transaction to a successful closing.  The fees are paid directly to the brokerage firms, and not to the individual agents.  The brokerage firm then pays the agent a portion of the commission earned.

What is title insurance, and do I have to have it?
Title insurance covers you and your lender from unknown matters regarding the title to the property, and may include unknown easements, problems with a previous sale of the property, undisclosed liens, etc.  If you are getting a mortgage loan on the property, your lender will require that you provide both an owner's and lender's policy of title insurance.  Title insurance in our area is provided by the title/escrow company agreed to in the purchase contract by buyer and seller, and is part of your closing costs.

What areas do you specialize in?
The majority of our business, and where we focus is Central and South Contra Costa County, including Walnut Creek, Lafayette, Moraga, Orinda, Martinez, Concord, Clayton, Pleasant Hill, Alamo, Danville, & San Ramon.  We have also completed transactions, and are very familiar with  Dublin & Pleasanton.

What is a short sale?
A short sale occurs when the owner of a property owes more on the mortgages for the house than it is currently worth.  In order to complete the sale, the owner's lender(s) will need to agree to accept less that the full amount owed them in order to release the lien and allow the sale to go through.  There can be a wide variety of factors that dictate how simple or difficult these transactions can be, or whether they can be accomplished at all.  From a buyer's perspective, this can offer good opportunities in value, but can also expose a buyer to many unknown factors.  Unlike a foreclosure, where it's a foregone conclusion that the sale will go through at some point, a buyer could wait months for a response from the bank only to be disappointed that an offer will not be accepted, or that the bank and seller were unable to come to agreeable terms.  Short sales become more complicated when there is more than one lender involved, as negotiations need to be conducted with all lenders simultaneously.  Unpredictability is the key factor involved in short sales.  If you're interested in pursuing a short sale property, one thing to look for is how organized and experienced the listing agent is in dealing with the lender(s), and how willing the seller is to work with the lender and get requested documents and information in a timely manner.  It's also important to make sure you have a time limit in your offer for a response, so you have an opportunity to walk away should the process drag out longer than you're willing to accept.