Frequently Asked Questions for Buyers
Buying a house raises a lot of questions. Over the years, we found that buyers we work with ask similar questions. Several Smith Group partners answer their most frequently asked questions.
What do I need to do to my house to get it ready for sale?
The Smith Group sells a lot of homes. In fact, last year we sold over 166 homes. We know what it takes to get a home looking prime to sell. In a lot of cases, we will suggest painting and carpet changes to freshen up the home. We have a team of sub-contractors that we can bring. We will also coordinate with our preferred staging vendors if your home needs to be staged. Our staging designers will also bring a fresh un-biased opinion on what changes to the home are needed. If you’re curious at all, reach out and we can start with a quick walk-through of your home and offer our opinion.
Should I wait to buy?
This is the age old question and I wish I had the crystal ball because if I did, I would own every property I could buy and sit on a beach somewhere. With that being said, the answer is likely not. Everyone’s situation is different. Obviously, you need to feel comfortable with your finances. Assuming you are, we don’t see a slow down anytime soon. The market is very strong; however, interest rates are rising and that can affect your affordability. We anticipate prices to continue to rise due to strong market fundamentals including a lack of inventory.
Do you think that prices will come down in the near future?
It is always difficult to answer this question and we all wish we had a crystal ball. Experts have predicted a price downturn for the last 2 years and we have yet to see it. Real Estate prices move in cycles, however the market is currently strong and we have no indication that this will change in the near future.
What will happen if I try to sell it in 1 or possibly 2 years?
It is usually best to take a longer-term look at the real estate market. Prices have escalated over the last 3 years so you are not buying at the "low end" of the market. Will prices drop over the next 2 years? This is not in general predicted by forecaster's but it is possible. If you are buying with the expressed intent of selling short term to make a profit, then note that this is NOT a distressed market. We are not at a low and therefore we cannot promise increased market increases over the next 2 years. However depending on the property and its pricing relative to the overall market, it is possible to find a "diamond in the rough" if selling short term is your goal. It will require patience, financial analysis and proper searching by us. We excel in finding and analyzing growth properties.
Do you think prices will drop and it would be prudent to wait to buy?
We do not expect any large price reductions over the next 2 years. What is your reason for buying? Do you want a bigger home? A better neighborhood? More property? Better views? It may be time to focus on what is important and look at the longer term. A happy family and the target goal of moving up - out - or down - may be the goal in the future beyond 2 years. Your reasons for buying may require a longer look at the market. If it is for your family than a short-term price flux is not really the issue - it might be 10 years of living in that house before you sell. A longer look may be more realistic.
Are there any major neighborhood concerns?
As an expert in my market, I will start by saying that crime is present everywhere. Assuming your agent knows, sells, understands and loves his or her area of expertise, it would be a wonderful opportunity to address the area and expose all of the benefits of living there. It is also OK for an agent to share an issue if there is one. But proper knowledge of the community you are selling in is not only relevant, but very important to buyers! Know your community, be the expert and buyers will always respond well.
Why are the sellers moving and where are they going?
Agents that understand their communities will have the answer to this question and it is often important to buyers. Buyers are naturally curious. They are looking for red flags or just valid reasoning. They want to understand the seller, the community and they want to be assured they are buying a "good" house. Agents with knowledge - general and specific are the most useful to buyers.
How’s the market?
Depends on the price point and location in Orange County — short answer: homes up to $1.5MM are selling quickly and with multiple offers while homes above $1.5MM have fewer offers with greater days on market.
Are we at the peak?
Orange County home values are strong but we are an area of micro markets meaning some neighborhoods are performing very differently than others — some communities are above 2007/2008 peak pricing and still going strong while others have yet to reach the 2007/2008 pricing and may never in this current real estate cycle.
Can I buy anything for less than $1MM in Laguna Beach?
Yes! A number of charming, beach-close properties are available under $1MM, nearly all condos or townhomes but many with great views and walkability to town or the beach.
What is entry level pricing for a single-family home in Laguna Beach?
About $1.2MM and entry primarily the neighborhood of Arch Beach Heights. These homes are on average 1700-1900 square feet with amazing coastline and ocean views with a great neighboring park and trail system.
Do you have any pockets in Three Arch Bay?
Call me ;-)
Why has my home not sold yet?
This is a common question I am asked by prospective buyers and there are many reasons a home may not have sold yet. Its important to remember not all homes sell in a day or in a week, and are purchased with cash. The question should be preceded by, “What is the average days on market for homes in this price range in this area?”. That is information your real estate professional should be able to answer with relevant data so you have a starting point to compare the marketing time of a home you are considering. There are many reasons a home hasn’t sold, it could be that the seller has limited access to their agent to show the home, the home is in poor condition and doesn’t show well, its not clean, poor photography, no staging, lack of advertising or poor marketing by the agent, and many more reasons. Most buyers think immediately that a home is overpriced, but that is not always the reason a home has been on the market for a longer than average time.
What if I change my mind, can I cancel the contract?
This is a complicated matter and why a buyer and seller should retain a full-time licensed real estate in California. But to make a long story short, the standard California Association of Realtors Purchase Agreement provides the buyer 17 days from Acceptance Date to complete the buyers investigation of the property and remove all their contingencies. The buyer has 21 days to remove their loan contingency. The buyers contingencies can include but are not limited to the inspection of the property & the neighborhood or area, the insurability of the property, review of the title to the property, review of homeowner association documents, taxes, natural hazards, appraisal value, and loan approval. In California, contingencies are not removed automatically, rather the buyer must remove contingencies in writing upon the date they are due (or they are extended until the Seller demands removal). If they buyer never removes their contingencies in writing, then the contract states the buyer is entitled to the return of their full deposit. In California, the initial deposit is generally 1, 2 or 3% of the purchase price. If the buyer and seller agree to the Liquidated Damages clause, damages for breach of contract are limited to 3% of the purchase price.
What will the seller take?
This is a question that cannot be answered. Only the seller really knows the answer and often what the seller is willing to accept may change. The key is to consult with your real estate professional and put a pen to paper and submit an offer. I can’t tell you how many times I have represented a buyer and seller and started the negotiation process and ended at an acceptable price and terms that makes everyone happy. You can’t get there verbally, you have to put a real offer in front of a seller to start the process.
Zillow says its worth…
I am often asked this question by clients that want to sell their home to buy another, or by buyers I am touring homes with.
Zillow Zestimates are not accurate. As a matter of fact, a federal lawsuit was filed against Zillow in August of 2016 by homeowners who claimed Zestimates undervalued their homes, making them harder to sell. In a separate lawsuit in 2017 in which a lawsuit stated that Zillow was concealing their Zestimates on properties listed by specific brokerages, the company stated “Zestimates are automated Zillow valuation on properties that use a 'proprietary formula' along with troves of data including public records”, according to the company. In other words, an algorithm and public data cannot determine the true current market value of your home according to Zillow, but is merely a starting point. Sometimes that starting point is off by hundreds of thousands of dollars. To truly determine the most accurate current market value of your home, you should contact a full-time real estate professional such as myself to tour your home to see location, floorplan, lot and interior condition. Once I have toured a home I can provide you an estimate of value based on recent comparable sales in your area. I also provide my clients advice and suggestions that can further enhance the value of their home with the greatest return on investment which has included remodels, painting, replacing flooring, staging and repairs. Potential sellers sometimes ask about remodel a kitchen or bathroom, or maybe the entire home, to get it ready to sell. That may or may not be a good idea. You may not yield a greater return by doing so.