Buying A House in Silicon Valley

Steps For Buying A House:

1. Determine your price range.
2. Find a house.
3. Submit a successful purchase offer.
4. Obtain a mortgage.
5. Close escrow.

Silicon Valley House Prices Are Some of the Highest in the U.S.

Buying a house is a major decision which isn't made quickly. You need to understand house prices and be confident in your choices.

The Juliana Lee Team publishes house prices for counties, cities, zip codes, and neighborhoods in Silicon Valley. Save yourself a lot of time and make better decisions. Get familiar with this information.

The Juliana Lee Team buyer agents will guide you to understand prices which match your needs.

Palo Alto zip code 94306 house prices.

Silicon Valley homes sell quicker than most other areas.

In other parts of the U.S. it is not uncommon for a house to take months to sell. In Silicon Valley, a house will often be sold in two or three weeks. See the houses most important to you before they are sold by working with a Juliana Lee Team buyer agent.

Average days for sale for Santa Clara County houses.

Finding A House

Finding a house is quite time consuming.

At the same time your are searching for a house, you are trying to understand how much you will have to pay. Unfortunately most home buyers find a house they want, then submit an offer which is rejected. This is often repeated 4 or more times, with the stress taking a toll each time. If it takes a month to find each house, the search can take six months. Knowledge will shorten this dramatically.

Although you may often visit open houses on your own, work with your Juliana Lee Team buyer agent so that she can watch for houses that you would like, but won't find on your own.

Learn house prices quicker.

When you talk to your agent about a house you are interested in, she will explain why the house is offered at that price and also what the actual sales price will probably be. Your experienced Juliana Lee Team buyer agent will save you time, money, and help you buy a better home.

When you make an offer on a house, if your offer is rejected, you won't be able to find out why your offer was rejected without the help of a top real estate agent. It typically takes 30 days for escrow to close and the sales price is not published until escrow closes. If the seller or her agent was concerned about your loan or contingencies, there is a good chance they will tell your agent when asked, but rarely will they tell you, a buyer, directly.

Get pre-qualified

We work with many different loan agents and lenders. We recommend those which deliver the best results. Work with our team and we will recommend loan agents who will provide the best mortgages for your financial situation. The top loan agents we recommend can give you a very good idea how much you can borrow and warn you about issues with your finances without running a credit report.

Dual agency and implied agency

The seller's real estate agent is required by law to represent the best interests of the seller. It is very difficult to simultaneously represent the best interests of the seller and the buyer. If there is a law suit, an attorney would argue that it is impossible to represent both. If the seller's agent gives you advice and you do not have your own real estate agent, it can be argued that the seller's agent is your agent because of implied representation (implied agency) even though he never agreed to represent you, he does not receive a commission, nor any other payment. To ensure that a buyer who wants to make an offer or who made an offer, has their best interests represented, most top agents representing the seller have a second agent represent the buyer and minimize talking to the buyer themselves.

Across centuries of human history, people have targeted groups of people in order to gain power and wealth. Lack of widespread knowledge, frustration, and greed have too often made this a successful ploy. Currently this is happening with real estate sales often under the guise of technological innovation or by simply telling buyers they do not need help from their own real estate agent. Phrases such as "cut out the middle man", "you will get full service help at a fraction of the price", "disrupting the industry", "transforming real estate", "over paid agents", surround claims that real estate agents are "bad people" and that the person/company making the claim will provide more for less because they are "smarter and better" often basically claiming that having little experience in real estate sales makes them better at it. One thing that you've surely learned from the internet revolution is that there are groups of people obsessed with being the best at almost any endeavor you can imagine. There have always been such people in the real estate industry. Real estate sales is a very competitive profession. Top agents have reached that level by hard work, creativity, and by building personal and professional networks.

Technology has had a dramatic affect on advertising but sellers want to know they are being protected when anonymous strangers enter their house. Buyers want to stand both in the house and in the neighborhood before they buy. A house sale will not be completed until the buyer visits the house. Buyers want the house inspected by knowledgable, real, people. Real estate tech companies often try to avoid work by saying the listing agent should do it or the buyers agent should do it. For two parties to agree to something as major as a house purchase, there has to be trust between them. People and personal connections will always be important in real estate sales.

Making A Purchase Offer

In Silicon Valley there are two main and different sets of forms used for residential real estate purchases: PRDS and CAR. Each has its own disclosures and contingencies. You should definitely take a look at several of these forms before you spend too much time actually visiting open houses. Quickly looking through these forms will give you an introduction to things you should be able to expect and to things to look for. The differences between the forms is partly historical and mostly has to do with defaults for responsibilities.

Most often when a house is listed for sale, the seller will hire a property inspector, a termite inspector, and possibly a specialist such as a roof, pool, or foundation inspector. This is done to make the sale more efficient and to take less time. The inspections are done to answer most or all questions a typical buyer will have about the property. The results of the inspections, whether good or bad, have to be disclosed to potential buyers before a purchase contract is completed. In some instances a buyer or the buyer's agent will want additional information. If another inspection is required typically the buyer will have to pay for it.

A seller is required to disclose "things they know or should know which materially affect the value of the property". The contract and disclosures, especially for a "common interest development" such as a condo, can run into the hundreds of pages. The standard forms (PRDS or CAR) can make it much easier for you to look through the contracts and forms especially after you've looked through them carefully at least once.

In addition to completely filling out the forms and signing disclosures, there are other things which can help your offer be accepted. The Juliana Lee team looks at each offer for ways to maximize the likelihood it will be accepted over competing offers.

Earnest money, liquidated damages

A seller will not want to accept a purchase offer unless they believe the offer will result in a purchase. Quoting the CAR Quick Guide:

"A liquidated damages provision in an agreement provides for a buyer to owe a specified amount of money to a seller in the event the buyer breaches the contract. For example, if a deposit of $5,000 is placed in escrow, and the liquidated damages provision is initialed by both buyer and seller, and then the buyer breaches the contract, the seller will be entitled to the $5,000 as liquidated damages. It does not matter whether the seller has incurred an actual loss that is more or less than $5,000. The purpose of the provision is to set the amount of damages in advance so that proof of actual loss is not necessary."

Does a liquidated damages provision automatically entitle the seller to the buyer's deposit if a transaction does not close?

"Generally, no. A liquidated damages provision only determines the amount of money a seller can recover from a buyer, and then only if the seller can prove the buyer breached the contract. A buyer may fail to close a transaction for a variety of acceptable reasons (e.g., where there is a financing contingency and the buyer could not reasonably obtain financing). To recover liquidated damages, the seller generally must prove in court or arbitration that the buyer's failure to close the transaction was a breach."

Down payment

The purpose of the down payment is to reduce the risk to the mortgage lender for loss of money if the buyer does not pay the mortgage as agreed. Generally a larger down payment reduces risk and gets the lender to accept a lower interest rate. A seller is more likely to accept a purchase offer, which has a financing contingency, if there is a large down payment, since the loan is more likely to be approved.

The earnest money generally forms part of the down payment because when escrow closes, there is no need for earnest money.

Financing contingency

When making a purchase offer, a financing contingency is often part of the offer. It will generally say that if the purchaser can not obtain a mortgage at a specified interest rate with a specified down payment, then the purchaser is not obligated to purchase the property. If property values are rapidly rising, a lender may decide that the purchaser is paying too much money because past sales have lower prices. The lender could decide there is too much risk for the specified terms and refuse to lend the money.

The seller can rarely judge a buyers ability to borrow money and may not accept a purchase offer with a financing contingency.

How are purchase offers judged

Although a seller is required to disclose everything that they know or should know which materially affects the value of the house, they are under no requirement to pick any offer over another. Sometimes buying a house in Silicon Valley can make you feel like you are taking part in an auction and thus you might tend to expect certain rules about which offer will win. There aren't any rules for picking a winner. Furthermore a house can be put up for sale with the statement "offers will be listened to on Wednesday". The seller can, at any time, decide to accept an offer. Offer price AND other factors guide the decision. Without the guidance of an experienced agent you can make assumptions that cause the house you want, to be sold to someone else.

Obtaining A Mortgage

For most home buyers, the interest paid on the mortgage is a major part of the cost of a house. Additionally the terms of the financing can have a big impact in the eyes of the seller judging whether you will complete your purchase offer. Judging who will be your best lender is very difficult for most home buyers.

Interest rates vary depending upon both the current economic situation and the perceived risk of the loan. Consider that a $500,000 loan at 4% interest has a monthly payment of about $2,387. The same loan at 4.25% interest has a monthly payment of about $2,460 which is a little more than 3% higher. Using the best loan agent for your purchase can result in significant savings.

Advertising a low interest rate is critical for a loan agent to get new clients. Yet every purchase and every borrower carries a different risk. Frequently a home purchaser can not get the advertised rate. Sometimes the circumstances of a buyer can cause one lender to reject the buyer while a different lender will be happy to loan money to that buyer. Different lenders judge things like retirement accounts, bonuses, rental income, self-employment, money in overseas accounts as having different affects on the risk of the loan.

Top real estate agents see how different loan agents perform under many different circumstances. Our team can point you to a couple different loan agents who are likely to provide the best mortgage for your purchase.

How much can you borrow

A rough estimate of how much you can borrow can be determined by the Quicken Loans Home Affordability Calculator. If you have low debt this will typically be very roughly four times your gross salary. Talk to one of our recommended loan agents to get a much better estimate and understanding of your own borrowing power.

A rough estimate of current mortgage rates is posted at Quicken Loans Today's Mortgage Rates.

A rough estimate of what the monthly payment for a mortgage can be determined by the Quicken Loans Mortgage Calculator.

The best financing is constantly changing

In recent times a major lender revised its loan criteria. During a several month long period while it was going through the change the lender was extremely slow to approve loans. Home buyers who used them, often had their purchase offers turned down because of their new reputation for delays. (They have recovered.)

Home sellers want to be fairly certain the sale of their house will complete on time. They want to know they can make progress on their own goals. They may not accept a purchase offer with a financing contingency. If you make a purchase offer with no financing contingency and your financial status changes, your loan which seemed like a sure thing, may be denied leaving you with a problem. An experienced top real estate agent has dealt with this situation before and may know of a financing solution that isn't dramatically more expensive. This may even be achieved by negotiating a deal with the seller which enables you to pay down your interest rate or finding a different lender. Knowledge and experience are critical.

When you've had a purchase offer accepted and are waiting for your loan to be funded, there are certain things you should avoid. It may seem like moving your money to an account where it is easily accessible would be a good idea but it can cause your lender to delay funding your loan while they re-verify your financial situation. Our top real estate agents will help you avoid problems both through advice they give to you and asking the loan agent to watch out for you.

Work with a top real estate agent and get suggestions for a loan agent. The Juliana Lee Team recommends loan agents who have demonstrated they will work hard to get the best results for our home buyers. Our recommended loan agents have even recommended that our clients work with a different lender who can provide better rates for a specific home purchase. The loan agents we recommend are typically the top agents at the company they work for and are given the authority to negotiate special consideration. Knowing how important the loan is to our home buyers, the Juliana Lee team wants to work with the best loan agents and does not take referral fees from them.

Closing Escrow

After your purchase offer has been accepted you will have to work at removing any contingencies you have in your offer and you will have to arrange financing for your purchase.

If your purchase was conditional upon getting additional information, you will have to be certain the information is obtained and evaluated within the specified time. If the information you receive isn't as positive as you expected, you might need to negotiate a solution. The Juliana Lee Team excels at making certain everything is done timely and in resolving issues.

If your financing for the purchase doesn't go as expected, you will need to fix the issues or find an alternative. The exceptional amount of experience the Juliana Lee Team has, the team's creativity, and their connections, enables our team to come up with the best solutions.

After searching for a home, negotiating a successful purchase, and getting financing, you will be hoping you can step back and take a breather. The Juliana Lee team has both a well proven system and the people for staying on top of issues, making certain that your escrow closes, and you get your new house.