Sunnyvale Real Estate Blog

A. First, let us commend you on saving money for a home. Buying a house is probably the most important purchase you’ll make in your lifetime – and having cash available gives you more options with your purchase.

Earnest money is an important factor when you’re making an offer on a house. When you make an offer to purchase a house, the “earnest money” is the deposit that shows the seller you are serious about the purchase. The money opens the escrow and can be applied to the buyers’ down payment or closing costs.

The earnest money amount is negotiable. It typically varies depending on the price of the house and strength of the market. Generally, it’s recommended that your earnest money deposit be about three percent of your offered price. And although earnest money is not required by law in most states, it is standard practice in local real estate transactions.

When the seller accepts your offer and earnest money, the property is taken off the market. In a hot real estate market, a large deposit may impress a seller enough so they will accept your offer instead of someone else’s.  However, buyer beware…it can also put you at significant financial risk if for some reason the transaction runs into trouble not covered by a contingency in your purchase agreement.

The Standard Offer And Purchase Contract stipulates under what conditions your earnest money will be returned if the contract fails. We’re experts on this stuff; if someone you know is in the market for a home and needs competent and caring representation, please call us at 408-861-4813.

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Was that you guys I saw being interviewed on the Channel 4 news recently, about the state of the local real estate market?

You betcha!  But, don’t worry; we’re not raising our rates just because we’re now famous.

Although we didn’t get paid for it, we help out when the local media needs an expert to explain things.  We were asked to comment on why homes in Sunnyvale were selling faster than any other city.

View Clip from KRON 4 News - Fastest Moving Market

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The secret is that not all properties hit rock bottom at the same time. Many properties have already hit bottom and they have already been purchased. Somebody else got the deal. Some properties will never hit bottom; the sellers will simply remove them from the market and re-list then in better, more expensive times. You can describe the market like this: If you threw a handful of small rubber balls in the air, they would not all hit the ground at the same time. They’d all bounce at different times, just like individual house prices.

Not every seller will come to the same conclusion at the same time. A     property is not worth what the seller wants, what the seller paid or what somebody else paid. A property is worth what a willing and qualified buyer will pay today, and not a penny more. The good news is sellers are starting to figure that out, one at a time.

The trick is identifying the bounce — and when to buy a specific property. This is particularly important with investment properties. As an investor looking to maximize profits, the price of a specific property is at rock bottom when the return on investment is better if you buy the property than if you leave your money where it is. Compare the real estate rental income and positive cash flow to the other investment options we all have, i.e. stocks, bonds, savings accounts, etc. As real estate prices come down, and consequently the mortgage payments and taxes come down, while at the same time the demand for rentals is growing, at some point the positive cash flow will make the investment irresistible. That is the bottom for an investor.

You must ignore everybody else and their investments. What we see now in hindsight is that many people paid too much when they invested in a seller’s market. Remember, for you to win, somebody else has to lose. Because so many people are losing so much of their equity, it makes your ability to win much easier in a buyer’s market like we’re in right now.

In a stable market, real estate prices are not driven up by investors. Home owners should be the predominant driving force. When a renter sees that their rent is higher than what they would be paying if they were to buy a similar property, the tenants tend to once again convert to homeowners. That is the bottom line for tenants. We know not all tenants have what it takes (income, savings and credit) to secure the American dream of home-ownership. Consequently, there will always be tenants and they will always need investors like us to provide them with a home.

It’s been years since we’ve seen prices low enough that we could invest in nice properties in great locations. If you’ve ever been tired of hearing, “I remember when I could” or “I should have bought them all when I had the chance.” Now you can. You have a second chance — take advantage of it!

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For anyone seriously considering buying in Sunnyvale or Santa Clara County, that really is the question.  The concern is whether or not they’ll be overpaying if they purchase today. The answer is to use your common sense and go with the voice of reason: If you plan on moving again in a year or two, or even less, then no, this isn’t the time to buy. But if you intend to live in your new home for five or more years, then it’s certainly a great time to buy. Owning real estate is one of the best investments — over time — that anyone can make. Where else can you purchase a major asset, live in that asset, have it appreciate over time, AND write off many of the costs of owning that asset? As long as you buy smart, you can always make your investment work for you.

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