I have been looking at Berryessa, Milpitas areas and am confused by the comps. Prices that were <1M in 2017 until Sep are now 1.25M and you can extrapolate from there. This is almost a 25-30% jump in 6 months. Can someone explain why this happened and if this has anything to do with the tax plan.
If One house sold for 1M in Sep 2017 and another neighboring one for 1.3M in Feb 2018, will the appraisal come for 1.3M or an average of the two. I wanted to know this as my agent is advising me not to put a loan contingency but I may not have enough funds to fund the difference if there is a big gap.
Sept 2017 comp is too old. You just touched on it, the market is moving so fast. Just a lot of money around and fence sitters jumping off due to rising mortgage rates.
First, lot of realtors are listing very low price to create competition.Now is really tough time to compete and win.
If you have seen this forum for sometime, you would have noticed the changes in 2018. There are lot of buyers with FOMO attitude buying any home they get, after being waited long.
There are few members bought home, like me, and indeed got those homes with tough competition. I had bid at least 6 homes (not miltpitas, berryessa) failed repeatedly within last 2 months before getting one.
The home I bought (1012 sqft, 8k lot) is 25% higher than the home I sold ( 1650 sqft, 10k lot) in 2015.
Yes, among the six offers submitted, I removed contingency for 5 of them, but had 1 loan contingency. I was confident that some how I will get a mortgage and waived the condition.
If you are first timer looking for primary, it is really tough for you to waive (it is up to you to decide).
IMO, lot of crowd looking for some home and Fear of missing out (FOMO) are the main reason. Milpitas and other parts, where BART line is there, hiked suddenly after seeing almost completed BART lines.
When we bought the appraisal came in lower than what we bid, although the last month(at that time) a similar home sold for 17 k more. The appraiser thought that other home was better updated but we knew it wasn’t as photos were deceptive in that case and we had visited that home & in our view someone overpaid for that home. Thankfully we had extra cash to pay the difference after the down payment.
Point is
appraisers are mandated to not have any contact with banks & vice versa
Appraisers sometimes might not be familiar with local conditions.
Hence, from my experience appraisal can come in low and it helps to have extra cash.
The current market is way different than it was a year ago.
There are several reasons I think the market is up the way it is:
people are worried about interest rates increase
FOMO people see their friends/co-workers buying
people moving money out of stocks into RE
a bunch of people who’s moved into the area in 2012/2013 have saved enough for a down payment
people were worried that Trump would crash the economy/market and held off purchasing in 2016/early 2017
We bought our house last year because of many of the reasons above.
In the current market, with multiple offers, your really need to be non contingent with >20% down. Otherwise, your price needs to be way above the other offers. Any offers with even 1 contingency is a way out for the buyer. Why would the seller risk this if he has many other offers to consider?
The faster you adjust to market dynamics the better it will be for you in the long run. You are looking for outside validation from old data. The 10-20% jump isn’t far out of line as it’s happened a number of times since the dip.