In a slowing market, is it better to sell your home or rent it out? Today I’ll discuss.

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If you’re a homeowner who’s thinking of selling in a market that’s slowing down, is it wiser to proceed with the sale or just rent out the home?

There are a few things you’ll want to consider when making the decision to rent or sell.

1. Are there any tax ramifications? If the home you own is your primary residence, tax law says that if you’ve owned it for two of the past five years, you can enjoy a capital gains tax exemption at the time of sale. For federal tax, that’s about $250,000 for one person, and about twice that for a couple. If you decide to rent your home out for a couple years, you may miss your opportunity to enjoy that tax benefit.

“If you don’t think you’re currently ready to manage a rental property, maybe it’s just better to sell right now and take your profits.”

2. Are you ready to manage a tenant? Managing tenants is no small task, especially in California where they have rent control and there are lots of laws that regulate landlords. Make sure you understand these factors before you jump into becoming a landlord yourself.

3. How long do you want to rent for? Are you looking to capitalize on the seasonal change of the market? For example, as we head into the fall, the market is usually slower than the spring and summer. If you’re planning to rent it out in the spring, then make sure you manage the rental time period accordingly.

4. Is it even possible to convert your primary home into a rental? If so, you may be able to use a 1031 exchange to help you defer taxes. It won’t help you become tax-exempt, but you can defer those taxes.

5. If you already have a lot of equity built up in your home, now may be the time to cash it in for a profit. If you aren't confident in your ability to manage a rental property and could stand to gain a large profit from your property, it may be better to sell your home and cash in on your equity.

If you have any questions about this topic and how it might apply to your specific situation, please feel free to reach out to us. We will be happy to analyze your case to see whether it’s a better option for you to rent or sell.

The market has slowed down, but following these five tips will help you sell quickly regardless.

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According to a recent study by Redfin, both San Francisco and San Jose saw a market slowdown in June. 

Fewer than 25% of homes listed in San Francisco received multiple offers that month. Last June, that figure was at 65%. And San Jose saw an even more significant drop. More than 70% of homes received multiple offers in San Jose last June, but less than 10% did this year during that same month. 

Therefore, sellers in these markets will need to follow a few key tips to ensure a quick, stress-free deal:

1. Declutter. Any items that you don’t need while your home is on the market should be stored away. Not only will this help you get a headstart on packing, but it will also help your home look neat, clean, and more appealing to buyers.

“Clean homes will always attract more buyers.”

2. Paint. A fresh coat of paint on the interior of your home can completely transform its appearance. Be aware, though, that today’s buyers prefer a sleek, modern palette over the neutral tones that were once en vogue. Greys and blues are in right now, but don’t go overboard with vivid hues. You still want to make sure your home attracts a wide audience, rather than a small niche of buyers.

3. Renovate your kitchen. If necessary, a mid-range kitchen renovation can bring a high return on investment. Replacing old countertops is always a good place to start. It doesn’t cost as much as you think to make a few strategic upgrades.

4. Replace old appliances. Speaking of upgrades, if your kitchen’s appliances are outdated, consider swapping them out for new, stainless steel models. Buyers will love the utility and the modern aesthetic these new additions provide.

5. Replace old flooring. Switching carpet out for laminate flooring is a cost-effective option that buyers will love. After all, hard floors are trendy right now. 

If you have any other questions or would like more information, please give us a call at 408-799-2558 or email me at Sophie@SophieRealEstate.com. We’d be happy to sit down and go over home buying or home selling with you!

What's the trick to determining your offer price on a home you want? Find out right here.

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When you’re in the market to buy a home, there will be a lot of information for you to sift through, both online and offline, that will help you decide on your purchase price. 

Once you’re interested in a property, you can find its estimated value on a home search site like Zillow or Redfin, and you’ll also find that property’s tax base on the county assessor’s page. Having this information at your disposal will help you decide on your purchase price. 

Let’s take a look at a specific home that’s on the market right now, which is located at 2088 McKenzie Place. As you’ll see at 1:08 in the video, Redfin estimates its value at $1.402 million and it's listed at $1.39 million. Zillow’s estimate is quite different: $1.224 million.   

Next, you’ll want to check out the property’s record on the Santa Clara County Assessor’s website—as seen at 1:32. According to the county assessor, 2088 McKenzie Place’s value is $989,000 once you factor in property taxes.

“When you’ve found a home you’re fond of, it’s important to analyze similar, recently sold homes in the same neighborhood.”

Of all three estimates, which one reflects the home’s true value the most?

The fact is all these estimates serve some purpose, but none are going to help you arrive at an exact purchase price. Zillow and Redfin use computer algorithms to generate home values, and they often exclude relevant information like hyperlocal market trends and competition. 

When you’ve found a home you’re fond of, it’s important to analyze similar, recently sold homes in the same neighborhood. The ideal comparable will have sold within the last few weeks or a month. Market conditions can change so rapidly that a home that sold just two months ago may sell for an entirely different price today. 

Once you’ve got a list of comparables to work with, determine how the home you’d like to purchase differs from those on your list. Pay particular attention to its natural lighting, layout, location, and upgrades. 

What is the interest level for that particular house? Think about how many buyers are competing for the home. The higher the level of activity, the higher its sales price will be. If it’s been on the market for quite some time, that leaves room for negotiation with the seller.    

If you have any questions or you’d like help coming up with the best offer price possible, please give us a call at 408-799-2558 or email me at Sophie@SophieRealEstate.com. We’d be happy to sit down and go over this detailed analysis with you!

Today I want to show you some interesting numbers that will give you a good indication of where our market is likely to go as we move forward through 2019.

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Recently, my clients have been asking me whether or not the market is likely to get better over the next few months. In light of that, today I want to show you some interesting numbers that will give you a good indication of where our market is headed. In particular, I want to discuss the difference between our monthly active listings and our monthly sold listings.

In the video above starting at 1:14, you can see a chart that lays out the number of new listings per month beginning in May 2018 and ending in May 2017, comparing that to the number of sales for those same months.

As you’ll notice on the chart, active listings outpaced the sold listings in almost every single month except for December 2018. That tells us that every time a listing doesn’t get sold, they either carry over into the inventory pool or the seller removed the listing from the market.

“By paying attention to these indicators, you’ll be able to predict an upcoming market slowdown.”

In the video above starting at 1:14, you can see a chart that shows the disparity between the number of new listings and the number of home sales for each month between May 2018 and May of 2019. Here, you’ll see quite a different picture: In many months, the buyer demand outpaced active listings on the market, leading to a higher number of sales than active listings.

Looking at these numbers, it’s not surprising why the spring 2018 market got so crazy. A bulk of the sales took place in 2017, so by the time spring 2018 came around, there simply wasn’t enough inventory left in the pool to satisfy buyer demand, leading to a reversal of these indicators.

By paying attention to these indicators, you’ll be able to predict an upcoming market slowdown. So be sure to keep an eye on these numbers so that you can make a decision about how to act as we continue deeper into 2019.

If you have any questions about buying or selling a home, don’t hesitate to reach out to me. I’d love to help you.

If we look at the latest trends in our market, we see that interest rates are still low and inventory is rising.

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As we head toward summer, it’s time to consider both the positive and negative trends affecting our Silicon Valley market.

One positive trend is that conditions are still stable and interest rates are still low. The average 30-year fixed rate is between 3.625% to 3.875%, and the average 7/1 ARM rate is between 3.125% and 3.25%. This is great news for homebuyers, given the average purchase price in our marketplace.

On the other hand, inventory is piling up all around the area—especially in places that aren’t in a good school district or have a lot of condos and townhomes. When inventory increases, it tells us that prices will either stay steady or start to drop.

“This is great news for homebuyers, given the average purchase price in our marketplace.”

In areas located within good school districts, however, sales are picking up speed. Cupertino, for example, had 38 sales during the month of May, which was higher than the number of new listings (37). Sales in this area have increased each month since the start of 2019, and after spiking in March and April, the number of listings declined during May.

This means that if you’re thinking of moving to a neighborhood in a good school district, now is the time to act—an increase in the sales volume is usually followed by an increase in prices. If you’re in the market for a condo or townhome or it doesn’t matter to you whether you’re in a good school district or not, you can take your time shopping for homes.

Whatever your plan may be, my team and I would love to help you with the home buying process, so don’t hesitate to give us a call and we can get started. If you have any other real estate questions, feel free to reach out to us as well. We look forward to speaking with you.

Are you thinking of shopping for homes? You need to get a pre-approval letter first—here’s why.

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There’s some great news for buyers in our market right now—The average mortgage rate has been dropping the past few months, and it’s almost 1% lower than it was during the winter of 2018. The sound of that might make you ready to shop for a home, but before you do, remember to get pre-approved first.

In fact, there are several ways a pre-approval letter will benefit you as a buyer.

First of all, it helps you better understand what your monthly mortgage payment will be.

“If you want to get pre-approved, give us a call and we’d be happy to connect you with a good lender.”

Secondly, it gives you a good evaluation from a lender’s perspective.

Lastly, it gives sellers more confidence in your offer. Recently, we listed a home that fielded multiple offers, and the one that ended up winning had a smaller down payment compared to the others, but the buyer had a strong pre-approval letter and could show that they could close quickly and without issue. In that way, a good pre-approval letter helps both the buyer and the seller.

If you want to get pre-approved, give us a call and we’d be happy to connect you with a good lender.

If you have any more questions about this or any other real estate topic, don’t hesitate to reach out to me. I’d love to help you.

Our current market outlook bodes well for sellers and buyers alike—especially when compared to just a few months ago. Find out more in today’s market update.

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This past winter, we had some abnormally cold weather here in Silicon Valley. At last, it’s beginning to warm up again, but it’s not just the weather—since March, our local housing market is on the upswing as well!  

We pay close attention to two market indicators, in particular: days on market and the sale-to-list-price ratio; both saw upward progress, compared to what we saw only a few months earlier.

Let’s observe the numbers:

In the first half of March, the average single-family home spent about 26 days on market for our area. As recently as January, that number was at 38 days. In a few months’ time, homes have begun to fly off the market, which is good news.

“Given these numbers, there are some great opportunities before sellers and buyers in the present moment.”

That trend has also carried over to our condo and townhouse market—in January, these homes were taking 44 days to be in contract to sell, on average. In the first half of March, the number of days fell sharply to 29.  

What does this tell us about the state of our market? Buyers are moving into action faster and are being more decisive about going into contract on the home they choose.  

We also saw something that was without precedent for our market: For the first time, our sales-to-list-price ratio tumbled below 100% this past January, but has since rebounded and passed the 100% mark. In other words, buyers are willing to pay above listing price right now. At this time last year, the ratio topped 110%.   

Given these numbers, there are some great opportunities before sellers and buyers in the present moment. If you’d like to assess your options, either way, please give us a call at 408-739-5000 or send me an email at Sophie@SophieRealEstate.com. I’d be happy to sit down and go over your individual situation with you. I hope to speak with you soon!