Thinking about buying a home in the Bay Area? Here are three tips for getting a better

Low home inventory and high prices are driving a seller’s market in the Bay Area, but buyers can negotiate costs.

Low home inventory and high prices are driving a seller’s market in the Bay Area, but buyers can negotiate costs.

Michael Noble Jr./The Chronicle 2016

It’s rarely easy to buy a home in the Bay Area. But more people might try soon.

Many real estate industry experts expect mortgage rates to decline this year. Though they probably won’t fall anywhere near the record-low levels of 2021 and 2022, they’ve largely reversed course from months of steady increases.

That doesn’t necessarily mean buyers have the upper hand in negotiations. Bay Area real estate agents told the Chronicle the region’s market still favors sellers, due to its limited supply of housing. But there are some ways to make the negotiation process easier.

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Here are three of their top tips.

Buyers shouldn’t wait for mortgage rates to go down, but should focus on getting the home they want at a price that works. 

Buyers shouldn’t wait for mortgage rates to go down, but should focus on getting the home they want at a price that works. 

Lea Suzuki/The Chronicle 2021

Tip 1: Figure out what you’re willing to pay

This piece of advice might sound obvious, but Megan Micco, an East Bay Realtor with Compass, pointed out that there are many costs buyers might not immediately consider.

That includes home insurance, which she noted is getting harder to obtain as insurers leave California. Some agents are also asking buyers to pay their commission if the seller doesn’t, after a court ruling against the National Association of Realtors’ policy that sellers must offer a commission to both parties’ agents.

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Bay Area properties are often listed at less than what the home is worth to attract more bids, Micco added, with the sale price generally ending up about 30% more than the listing price.

Buyers shouldn’t wait for mortgage rates to come down more, said Sandy Jamison, a real estate broker with the San Jose-based Jamison Team, as they will probably be competing with many more bidders if they do. Many people refinance their mortgages after buying the home, she added.

Generally, buyers should focus on making sure they get a home they like, rather than on getting the lowest price possible, Jamison said.

“It’s more important to get the right house at a fair price than it is to get the wrong house because you got a good deal,” she added.

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A rate buydown lowers monthly payments through a lump sum to reduce the rate.  

A rate buydown lowers monthly payments through a lump sum to reduce the rate.

 

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Tip 2: Consider a buydown — carefully

One way to reduce mortgage costs is to get a rate buydown, which essentially lowers monthly payments through a lump sum to reduce the rate.

Susie Wyshak, an East Bay Realtor with Keller Williams, said buydowns have recently become more common. In same cases, sellers are willing to contribute to the buydown if the buyer accepts a higher price on the home.

The strategy has some important limitations. Sellers who are fielding several offers have less of an incentive to offer buydowns, though those whose listings have been on the market for longer than 30 days are usually more willing to negotiate, Micco said.

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Jamison warned that a buydown isn’t always the best option unless the buyer keeps the loan terms for the entire term — and most don’t. Another option is asking the seller to pay the closing costs or for minor repairs. They won’t always agree, especially if they have other strong offers, but Jamison said many do.

 Knowing the homeowner’s circumstances or reasons for selling can give the buyer an advantage. 

 Knowing the homeowner’s circumstances or reasons for selling can give the buyer an advantage. 

Keith Srakocic/Associated Press 2019

Tip 3: Try to figure out what the seller needs

Of course, the simplest way to get a seller to accept a bid is to offer the most money. But that’s not an option for every buyer, with less than 1% of homes in the Bay Area considered affordable to the typical household.

There are other ways to make an offer more appealing, however. Knowing the homeowner’s circumstances or reasons for selling can give buyers a hint, Wyshak said. For example, many homeowners in the Bay Area don’t want to buy another home until their current property is sold. Such sellers might be drawn to an offer allowing them to stay in their home for up to 29 days.

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If “you can work with the seller’s timing … they might take your offer, even if it’s lower, because you’re accommodating their needs,” Wyshak said.
If a seller needs more time to move, a buyer can offer to rent out the home to them after the deal closes, Jamison said, an agreement known as a rent-back. That gives the seller some flexibility while providing the buyer a bit of extra money.



This article was originally published by a www.sfchronicle.com . Read the Original article here. .