North San Fran Bay Area Residential Real Estate Markets on Rising Interest Rates
Over the last few years, the real estate market may have been influenced by the different demographics and how they see the market. As baby boomers have become seniors who are more skeptical about downsizing due to higher interest rates, the real estate market has experienced more movement from younger generations, as reported in the North Bay Business Journal.
“Millennials still have a lot of funds. But the issue with millennials is fatigue,” she said.
Millennials starting to buy in plentiful numbers recently offered a cash cow to the real estate world, if they didn’t come into the picture with huge student loan debt from college. But they grew tired of bidding wars on what homes were available, Lexa explained.
“If there’s one thing we learned during the pandemic, it is that we need to make sure homes are listed in a competitive way,” she said, referring to the price point and presentation.
Another indicator that the North Bay real estate market may be simmering is the increase in calls in the last few weeks at Lerman Law Group, a San Rafael-based real estate practice.
Something most callers had in common is that the purchase of a home was under contract, but the price was now higher than what is expected to come from the sale of the buyer’s existing residence. As a result of the major competition for homes to buy in the market, contingencies in purchase contracts were waived.
Attorney Phil Diamond has told callers that removing contingencies to the sale would limit their legal options to move away from the deal.
“Unless there was something the seller was misrepresenting that led you into contract to begin with, likely you’re going to be stuck performing on the contract or lose your deposit,” Diamond said. “If there was seller fraud or a lack of disclosures, the best case would be to go into dispute resolution to get the deposit back through mediation or arbitration.”
Typically, seller’s agents request deposits of 3% of the purchase price, so that the owner would get something if the buyer were to walk away, according to Margreiter of Century 21 NortyBay Alliance. With a 3% deposit, at risk would be $30,000 on a $1 million home.
California real estate law has a “free look” purchase contract that is there to protect the buyer by letting the buyer exit the agreement if some elements in it are not satisfied, according to Margreiter, who has 21 years of experience in the local real estate industry.
That is the reason his brokerage recommends that buyers don’t waive common contingencies to the sale such as lining up a loan, completing physical inspections such as roof and pest control and finding out if the property is insurable — specifically, with updated fire-risk maps. However, waivers don’t stop the buyer from going through those steps, just that any issues found can’t break the contract, Margreiter said.
For cash buyers, a waiver of an appraisal may make sense if the price seems reasonable, Margreiter said.
If the buyer wants to make the purchase contingent upon the sale of another property, that’s done on a separate agreement, which defines how long the seller has to wait for such a transaction before moving on to another buyer. But such a contingency would be a tough sell these days, Margreiter said.
“In a seller’s market, a sale contingency is almost never accepted,” he said.
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