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The Site for Santa Cruz Real Estate
Santa Cruz Market Update: February 2005
This article was originally published in the Good Times Magazine, the February 10-16, 2005 issue.
Does the phrase “Seller’s Market” mean anything to you? If you are a home buyer in Santa Cruz these days, it’s a term you have some familiarity with! Inventory – which is to say, the number of homes for sale on the market – is precariously low. Once again, we are in a situation where too many Buyers are chasing after too few properties. Most Sellers are faced with the delightful prospect of a “mulitple-offer situation.” On a day chosen with their Realtor®, Sellers open the offers they have received, and comb through them, choosing which lucky few Buyers will be graced with a counter offer. Ultimately, one lucky Buyer will rise to the top of the counter-offer fray, with a winning bid that is likely a fair bit over asking price, and with terms that are highly favorable for the seller.
If ever there was a time to sell in Santa Cruz, this is it! Property prices have appreciated handsomely over the past several years. If you’re a property owner, you may be surprised by how much your home has soared in value – even in just the past year or two. Are you curious to see how much your home is worth in today’s blistering Seller’s market? If so, log on to my web site at http://SantaCruzHomePrices.com to receive a free, no-obligation, over-the-Internet Home Price Report.
If the shoe is on the other foot – that is to say, if you are a Buyer in today’s market, what are you to do? Sit out of the market, and wait for prices to rise even higher? If you’re a committed buyer, how can you best package your offer so that it has a chance of getting accepted, or at least making the cut such that you’ll get a counter offer?
As a Buyer, you must present an attention-getting offer. To most Sellers, the price you offer is what is of the most interest. If you know there will be multiple offers on the property, you’ll want to offer more than asking price. For this reason, consider limiting yourself to properties that have an asking price which is a fair amount (say, 10%) lower than the maximum amount of the loan you are approved for. This will give you some “headroom” for negotiating.
While price speaks loudest, the other key factor is terms. Sometimes, the terms of your offer are as important as the price is. For example, offer the Seller the quickest close (shortest escrow) possible. Sweeten the deal by offering to pay some or all of the Seller’s closing costs. In short, give the Sellers the most favorable terms possible. Also, you want to give the strongest assurances that you are able to complete the transaction. Your mortgage lender can help here by crafting a rock-solid pre-approval letter. If you get to the counter-offer stage, get another pre-approval letter from your lender, reiterating your worthiness as a Buyer, assuring them that you can pay the (likely) higher price you are offering.
With a little luck, some perseverance, and a good Realtor® on your side, it is very possible to get into a home, even in this challenging market.