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Real Estate - Sell Townhouse and Buy 'Forever' Home?

Lots of people with big cheddar around here. 31 offers and the accepted offer was at least $1.34m in cash :wow

back to the search.
 
Lots of people with big cheddar around here. 31 offers and the accepted offer was at least $1.34m in cash :wow

back to the search.
31 offers?!
Why the rush? Have you looked into the details of buying a home more than the appraised value? It's a non issue for cash offers, but can get wonky with a mortgage, the LTV, possibly having to pay the difference up front in cash etc.
Also with the forever home you'll be stuck with property tax on a 1.3mil home with a 2% max increase every year...forever.
 
31 offers?!
Why the rush? Have you looked into the details of buying a home more than the appraised value? It's a non issue for cash offers, but can get wonky with a mortgage, the LTV, possibly having to pay the difference up front in cash etc.
Also with the forever home you'll be stuck with property tax on a 1.3mil home with a 2% max increase every year...forever.

Appraisal wasnt going to be a problem, we were sticking with conventional for the loan and cash for the difference up to a certain amount we were comfortable with. Avoiding a jumbo loan.

If the desire is to stay close to family, danville, san ramon areas, and want a house on that's 2000sqft with at least a 10000sqft lot, $1.1m is going to be the base price. This house's location was special with a creak backyard, house was 99% done remodeled, needed nothing, walking distance to my parents, 7 minutes from sister and nieces/nephew, immune to san ramon traffic, court location.

We can look in pleasant hill and parts of concord. Concord is tricky because Treat and Ygnacio valley are parking lots wets in the morning and east in the evening. Have to stay from west of Cowell. Also, for family in san ramon, driving north on 680 is also a parking lot from 3-7pm during the week so any family help with kids is off the table. Also, childcare facility we like is in san ramon.

Also, I don't see a collapse in the real estate market everyone is hoping for. What would cause it? If houses are still selling despite Covid and lenders actually making it harder to qualify, I don't see a strong dip. So it drops a little in a couple years, prop taxes can be re-assessed and drop too. In 5 years that house we missed will be worth $1.7m easily.
 
Appraisal is a problem if you have to offer over asking price and you don't know with 100% confidence what the appraisal will be until after your offer is accepted. Or can you get an appraisal before going into contract these days?

IMO with the bay area it's all very uncertain given that eviction moratoriums are still in place. SJ just extended it another month to the end of Sept. The moment those are lifted and a boatload of people are evicted (who the heck can pay back 6+ months of rent over a year or so), landlords will be scrambling to get paying tenants. If there's no tenants to fill in, landlords may have to sell, creating a supply of homes for sale. No idea how big of an impact, if any, this could have on the real estate market. More unknowns these days than ever before, there's no reference point for what we're going through imo.
 
Appraisal is a problem if you have to offer over asking price and you don't know with 100% confidence what the appraisal will be until after your offer is accepted. Or can you get an appraisal before going into contract these days?

IMO with the bay area it's all very uncertain given that eviction moratoriums are still in place. SJ just extended it another month to the end of Sept. The moment those are lifted and a boatload of people are evicted (who the heck can pay back 6+ months of rent over a year or so), landlords will be scrambling to get paying tenants. If there's no tenants to fill in, landlords may have to sell, creating a supply of homes for sale. No idea how big of an impact, if any, this could have on the real estate market. More unknowns these days than ever before, there's no reference point for what we're going through imo.

Appraisals are important, I understand, but when you put 40% down, the appraisal according to the bank is less important. If the house appraises at $1,250,000 but are only loaning $765k, the higher the house sells for, the less risk the bank has to get their $765k back. We default and they easily sell the house for $1.2m, get their $765k loan back and we the buyers lose our down.

The fact that much is being put down offsets a lot of risk for the bank and makes it a very small monthly payment relatively.

Interesting article on bay area real estate. Also as mentioned above, rates are historically low and its single family residence we'd plan to stay for decades. Any fluctuations in the market will be weathered and won't impact our ability to make the mortgage payment. If 31 offers were made, its clearly a desirable area.
 
Also, I don't see a collapse in the real estate market everyone is hoping for. What would cause it? If houses are still selling despite Covid and lenders actually making it harder to qualify, I don't see a strong dip. So it drops a little in a couple years, prop taxes can be re-assessed and drop too. In 5 years that house we missed will be worth $1.7m easily.

I'll.bet you $100 right now that house will not appreciate nearly 50%. In 5 years

I can't believe you are so short sighted you can't see the real damage being done to the economy. Salesforce posted massive profits and still laid off almost 200 people in sf.

50% of food places are closed permanently per yelp. You may say ohh those poor blue collar workers but they are contributing to the tax base that pays your salary. The next fiscal year is going to look fucked for a lot of people, businesses and governments.
 
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I'll.bet you $100 right now that house will not appreciate nearly 50%.

I can't believe you are so short sighted you can't see the real damage being done to the economy. Salesforce posted massive profits and still laid off almost 200 people in sf.

50% of food places are closed permanently per yelp. You may say ohh those poor blue collar workers but they are contributing to the tax base that pays your salary. The next fiscal year is going to look fucked for a lot of people, businesses and governments.

Shhh. Everything is fine, all huckleberries and dandelion fuzz! Of course nothing bad is going to happen. Sheesh. This is America! Rah.
 
Appraisals are important, I understand, but when you put 40% down, the appraisal according to the bank is less important. If the house appraises at $1,250,000 but are only loaning $765k, the higher the house sells for, the less risk the bank has to get their $765k back. We default and they easily sell the house for $1.2m, get their $765k loan back and we the buyers lose our down.

The fact that much is being put down offsets a lot of risk for the bank and makes it a very small monthly payment relatively.

Interesting article on bay area real estate. Also as mentioned above, rates are historically low and its single family residence we'd plan to stay for decades. Any fluctuations in the market will be weathered and won't impact our ability to make the mortgage payment. If 31 offers were made, its clearly a desirable area.
You stated it yourself, you assume 100% of the risk in cash between the appraisal price and the bidding war price that you won.

math time
you have $485K down
Asking price for a home is 1,300,000. You offer 1,350,000 and the seller accepts.
Appraisal is still for 1,300,000. You only have $435K down now because the bank won't cover the $50K of auction money you used.
Your mortgage has now increased by $50K including interest for the life of the mortgage. Hopefully you can refi to a 15yr mortgage within a few years to lessen the financial hit of that $50K+interest.

You're assuming you will stay for decades. Life happens and you could end up moving out of CA entirely. If you default why would you assume the house would sell for 1.2m? Back in 2008 we bought our townhouse for $347K that previously sold in 2005 for $515K. Price now is near $700k, which is nuts. If you default, it's likely the entire area is hit hard and there's massive job loss. With the uncertain financial climate right now, the possibility of that happening soon is way higher than normal IMO. Like Caddywumpus mentioned, the low to middle class being wiped out even more in the bay area is going to affect everyone. I recall that you work in public schools right? Once financial reality hits and ppl are evicted, enrollment levels of kids in public schools will decline even faster than it was declining pre pandemic. Cuts will be made, schools will be closed etc etc. Stuff like this was already happening pre pandemic, it will just accelerate :(.

You have a new wife. New kid. That's enough stress and responsibility. Adding a new mortgage for a home at an all time high price can really pile it on as a husband.

k, I take it back Dubs...dunno if this is a good idea. Just think it through dude :thumbup
 
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I'll.bet you $100 right now that house will not appreciate nearly 50%.

C'mon man, real estate only goes up! Buy now or forever miss out. :laughing

That 1.3 mil house will see a 1.7 mil price tag some day nearly for certain. But it will likely see 1.1 or even under a mil first.

I can't believe you are so short sighted you can't see the real damage being done to the economy. Salesforce posted massive profits and still laid off almost 200 people in sf.

50% of food places are closed permanently per yelp. You may say ohh those poor blue collar workers but they are contributing to the tax base that pays your salary. The next fiscal year is going to look fucked for a lot of people, businesses and governments.

Quite right. Lots of pain ahead. The economy is running on fumes and economic stimulus crack.
 
... want a house on that's 2000sqft with at least a 10000sqft lot, $1.1m is going to be the base price. This house's location was special with a creak backyard, house was 99% done remodeled, needed nothing...

We can look in pleasant hill and ...

There are plenty of 2,000 SF houses in PH but the other stuff maybe not so much. Here’s one house I happened to see that sold recently and based on the place you didn’t get, I’d say the selling price is even crazier than I thought when I first saw it.
 

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C'mon man, real estate only goes up! Buy now or forever miss out. :laughing

That 1.3 mil house will see a 1.7 mil price tag some day nearly for certain. But it will likely see 1.1 or even under a mil first.

Quite right. Lots of pain ahead. The economy is running on fumes and economic stimulus crack.

Agreed. Assuming 2021 find a vaccine June /July might be a great time to buy if you can.
 
I've got my eye on Sac. The Pocket/Greenwood area looks pretty nice but I am going to wait and see what happens when all this market stimulus and eviction/foreclosure moratoriums run their course.
 
I've got my eye on Sac. The Pocket/Greenwood area looks pretty nice but I am going to wait and see what happens when all this market stimulus and eviction/foreclosure moratoriums run their course.

BTW "Greenhaven" not Greenwood, Zip 95831. Adjacent 95822 has some similar properties too. Right now it is multiple offers and quick sales for most areas in Sac.

Cheers
 
BTW "Greenhaven" not Greenwood, Zip 95831. Adjacent 95822 has some similar properties too. Right now it is multiple offers and quick sales for most areas in Sac.

Cheers

I'll have to look around there too. And you are right, right now things are way too hot to jump in.
 
A friend sold their home for $3mil a few weeks ago. 6 offers. It was $1.3mil in 2012. The new eviction moratorium until January 2021 with 25% rent payment...not sure how that will land in the housing market from now until spring 2021.
 
I'll have to look around there too. And you are right, right now things are way too hot to jump in.

My house is now at the same price it was in the peak market a year or two ago. It's crazy.
 
Dubs the great thing about your indecision is that by the time you make up your mind the market will have corrected downward.
 
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