When Should You Make A Low-Ball Offer?

We generally see investors make a lot of low-ball offers. They don't care if they get the house or not, on to the next if their offer is rejected.

Buyers that are planning on living in the home, they want to write an offer on, usually are more readily open to NOT writing a low-ball offer. They want to get the house so they certainly want to get their offer accepted.

Let's be serious, when the market is a hot, hot, hot Sellers market, there aren't many opportunities for a low-ball offer getting accepted. 

But, when should you consider making an offer well below the Sellers list price? We, your agents, will always provide you with a market analysis of what the home you have fallen in love with is 'worth'. What it's market value truly is. 

1) If the property just hit the market & is listed at the correct market value ~ don't do it.

2) If the property has been on the market for a while ~ maybe do it.

3) If the property is overpriced ~ do it.

The biggest issue is, of course, the Seller. They priced their home where they wanted to sell it. Are they motivated to truly sell their home? Will you offend them if you write a low offer? Have they done any price reductions since listed?

For a buyer, are you willing to lose the home you want by writing a low offer. Most contracts have an appraisal contingency and that will help you if it's overpriced. It, of course, depends on how your agent wrote the offer on the buyers behalf.

Honestly, the most important thing is to listen to us, your Realtors. We know precisely what is happening in the market. We can find out things you can't. We will guide you on how to get the home of your choice for the best price possible. That's just part of what we do, but we do it very well.

If you have more questions about this topic, or any other real estate topic, just reach out. 

Pay off Debt Before or During Escrow?

Not uncommon for a buyer to talk with a lender and the lender suggests paying off some debt to reduce their "debt-to-income" ratio for a better mortgage rate. If you've got the money in the bank it's great.

If you don't, but it still needs to be paid off to close escrow? Thanks to our wonderful escrow team for this reminder:

Paying Down Debt During the Escrow Process

It is actually quite common that you may be asked to pay down some of your debt during the escrow process. It may be a car, or credit cards, or other personal loans. Don’t consider this a bad thing! In a way, it’s a lot like consolidating your debt. If you’re wondering how the process works in that some (or all) of your debt is eliminated during the escrow process, read on!

By this point, you are probably acutely aware of the term “debt to income ratio.” Your mortgage lender uses this equation to determine how much money you are able to borrow. The more debt that you have, the less money you will likely be able to borrow. This is why mortgage lenders often request that borrowers pay down certain debts as a condition of loan approval.

And often, these debts are paid by escrow. This all has to do with timing. If you were to simply mail in your credit card or car payment, or even pay them online, it could take weeks before your lender could verify that these debts were paid in full. On the flip side, when escrow makes these payments, they are recorded on the buyer’s final escrow settlement statement, which is official enough for a mortgage lender to consider the debt paid as requested.

In order to help things move along smoothly, here are some other things to keep in mind when you are asked to pay debts in escrow:

Correct Account Numbers

Often times, your mortgage lender is pulling this information from your credit report, and that may mean they only have access to a partial or redacted account number or abbreviated company name. Make sure you provide your most recent statement with the correct payment mailing address and your full account number to escrow. This will ensure your account is credited properly and in a timely manner.

On-Time Payments

The last thing you need when you’re buying a home is a late payment, and that can happen when escrow is handling a debt payment. Make sure you keep close tabs on your escrow closing date and your normal monthly payment due date because debt paid via escrow will not be paid until the day escrow closes. It’s customary that physical checks are mailed, so allow time for this to avoid late fees. This may mean that you need to make a normal payment, and any overpayment will be returned to you.

Make Sure To Provide the Correct Statements

At the close of escrow, the original checks payable to the credit card or other loan company will be mailed to the addresses on the latest statements that you have provided to the Escrow Holder. You want to make sure to provide the correct statements so that you can be confident that the checks are mailed to the appropriate company.

Need to Change Amounts?

Because the dollar amounts are taken from your credit report, a living and ever-evolving document, you may find that you need to change the amount paid to your debtors (this can be higher or lower). Keep in mind that your Escrow Officer is required to abide by the written instructions of your mortgage loan company, so if you need to change the amount, contact your loan officer to find out what is required to make this happen.

This is just another instance where communication is key during the home buying process. Be sure to stay in close contact with both your Escrow Officer and your Loan Officer to ensure that the payments of your debt during escrow goes smoothly.

We're here to answer any questions you may have.

Start with us and we'll get you to the finish line!

Good Info From Calif Association of Realtors!

They call it the 'Market Minute Write-Up" & it's done every Monday. This one was good enough to share in it's entirety!

"January 08, 2024 - Americans are feeling more confident about the housing market at the beginning of 2024 as buyers and sellers start seeing a glimpse of hope at the far end of the tunnel. While rates had a slight uptick in the first week of the year, easing inflationary pressure and a soft economic outlook prompted many to believe that mortgage rates will decline, albeit slowly, in the next 12 months. The housing market should see a bounce back in activity in the coming months if the sentiment can maintain its upward momentum. The improvement, however, will likely be gradual as tight housing supply remains the norm in 2024.

Mortgage rates go up slightly to start off 2024: After reaching a 7-month low in the last week of December, mortgage rates kicked off the year with a mild uptake in the first week of 2024. The average 30-year fixed rate mortgage (FRM) reported by Mortgage News Daily inched up from 6.67% on the last trading day of 2023 to 6.74% at the closing on January 8, 2024. The boost in rates was due partly to more upbeat economic data and partly to the recent increase in traders’ doubts about the Fed’s rate cuts in the next 12 months. With the latest jobs report suggesting a stronger-than-expected labor market, rates could continue to see some volatility in the coming weeks. Mortgage demand, meanwhile, remained soft as mortgage applications dropped again at the end of last year. Despite the recent downward trend in rates, the latest purchase application index reported by Mortgage Bankers Association decreased 5% compared to two weeks ago, as supply constraints continued to hold back market activities.

Home purchase sentiment bounces back at year-end: With interest rates dropping to the lowest level in seven months, optimism about the housing market began to come back at the end of 2023. The home purchase sentiment index released by Fannie Mae jumped 2.9 points to 67.2 in December and reached the highest level since April 2022. The share of consumers who said that it is a good time to buy rose to 17%, an increase from the survey low of 14% recorded in the prior month. The surge in confidence last month was driven primarily by the increase in optimism that mortgage rates will soften, as a record-high 31% of the respondents believed that rates will decline over the next 12 months. While rates have been moving mostly sideway in the past couple of weeks, receding inflationary pressures coupled with the expectation of the Fed’s policy rate cuts will likely lead to more downward drifting in mortgage rates later this year.

Solid residential market pushes up construction spending in November: Despite a slowdown in new home sales pace in November, construction spending advanced again in November as single-family construction continued to provide support to new building activity. Total outlays for residential and non-residential posted a solid gain with an increase of 0.4% month-over-month in November and improved for the eleventh consecutive month. Residential spending was up 1.0% from October, with single-family outlays surging 2.9% as inventory remained low in the existing housing market. Multifamily outlays inched up 0.1% month-over-month in November but continued to moderate, as apartment demand remained on a normalizing trend. Builders are expected to pull back further in 2024 as the apartment supply pipeline remains saturated in the next 12 months.

December job gains top expectation: The December jobs report came in stronger than expected yet again, with employers adding a seasonally adjusted 216k jobs last month. Employers added a total of 2.7 million for the year 2023, a sharp decline from 4.8 million in 2022, but still a stronger number compared to the few years preceding the pandemic era. The unemployment rate was unchanged at 3.7% in December, but the labor force participation dipped an unusually large 0.3 points to 62.5%. A slip in the rate is a discouraging sign for the Fed officials, as fewer people being drawn into the labor force could put upward pressure on wages. Average hourly earnings, in fact, rose 4.1% year-over-year in December, a tick-up from 4.0% in November. The latest jobs report, while more robust than the consensus expectation, continues to suggest that the labor market has cooled over the past year. As such, it is unlikely to have a change on the Fed’s rate movement perspective in the next FOMC meeting.

Holiday spending up modestly in 2023: Consumers continued to spend during the holiday season, with U.S. retail sales – excluding automotive - increasing 3.1% year-over-year for the time period between November 1 and December 24, according to Mastercard SpendingPulse. Online retail sales were up sharply by 6.3% from a year ago, while in-store sales posted a more modest gain of 2.2% year-over-year. The restaurant sector recorded a big jump, with sales climbing a strong 7.8% from the comparable period a year ago, as family and friends celebrated their holidays outside of homes. According to Adobe’s Digital Price Index, many shoppers have used the “buy now, pay later” financing option during the holidays, with the payment plans racking up $16.6 billion in online spending during the holiday season, an increase of 14.4% from the year-ago holiday period. This may imply that there could be a pullback in consumer spending in the months ahead as bills come due for those shoppers who borrowed forward at the end of last year."

So there you are!!! And, I always find it interesting to see what other agents think (bottom section of picture above).

Santa Clarita Home Sales 2023 Round-Up

I do this every year. Because I presume you are interested in the totals! Reminder that I go all the way out to Acton in the East, Stevenson Ranch to the West, Newhall to the South and Castaic to the North. 

With the high interest rates and low inventory, the housing sales in Santa Clarita certainly reflected those challenges!

Our total sales for 2023 hit 2611. Spring season was the best with 810 closed sales. 2022 we hit 3301. The robust year of 2021 totaled 4861. Our average closed escrows over the years has hovered around 3900/year.

So, yes, it was definitely a challenging year. But, we have always had challenging years, robust years, and normal (if there is such a thing anymore) years.

Let's see what 2024 brings! 

Leslie, Jennifer, and I are ready!!!