Real Estate Articles

How to improve your chances of being a homeowner

Cash is still king in this market, and it was evident in the month of January, when 31 percent of all new and resale houses and condos sold in California were cash sales, according to DataQuick Information Systems. That's the highest level in at least 23 years, since the real estate information service began collecting this data.

January's share of cash sales was up from 29 percent of all home sales in December and 28.5 percent in January 2010. Since November 2008, the cash level has been above 20 percent. The median price paid for a California home purchased with cash was $160,000. The median price for all homes sold statewide in January was $239,000.

The share of cash purchases in the Bay Area was nearly 29 percent in January, also a record for the nine-county region. Cash sales made up 26 percent of all home sales in Santa Clara County, up from 22 percent in January 2010, hitting the highest level since 1988.

Here are some tips from the Silicon Valley Association of REALTORS® that could improve the chances of first-time home buyers when they are up against cash buyers:

• Put your credit in order, pay down those credit cards.
• Get preapproved for a loan, not just prequalified. Pre-approval goes one step further than getting prequalified because you actually fill out a mortgage loan application and may have to pay an application fee. After extensive examination of your financial situation, your lender will commit, in writing, to fund your loan, pending a successful appraisal of the home and a few other conditions. You don't have to follow through with the loan, but getting pre-approved for a mortgage typically enables you to move quickly and make an offer that is not contingent upon obtaining financing.
• Provide as much down payment as possible. A 20 percent down payment or more would give you an edge.
• Once you are preapproved for a loan, consult an experienced Realtor and evaluate your priorities. A knowledgeable Realtor can give you the most up-to-date information about homes and market conditions because news changes from week to week. A good Realtor will tell you not to be discouraged and caution you not to be tempted to over-stretch your finances to buy a home.
• The best offer is one the sellers know will not fall apart. There is greater potential for cash buyers to walk out on a short sale when they find a quicker deal elsewhere. If you are interested in a short sale, assure the seller that you will stick around for the duration.
• Contingency requirements can prolong the closing of a transaction. You'll be in a more competitive position if you are able to remove as many contingencies as you feel comfortable with.

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please email or call the SILVAR office at (408) 200-0100.

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