Wednesday, February 6, 2019

Are Real Estate Prices Going Up or Down? 107924606

     In our previous blog, we stated that many believe the market has leveled out and softened, but we also stated that there seems to be a pent up demand for many types of houses in newer and higher socio-economic neighborhoods.  One basic rule of economics is that if the demand exceeds the supply, then prices will not decrease, but "may" yet increase more.  Is there still a demand for certain types of homes?  Yes, I believe most of us believe that a huge demand is here.  How many of us even since the New Year of 2019 have heard people shout out on social media, "my house just sold in one day," or, "my house just sold in two days?"

     Not only are there qualified buyers with housing needs right now within our own tri-county region, there are also Bay Area people wanting affordable "nice" housing and many of them have cold hard cash and will even sometimes pay more to beat the competition, thereby eliminating the appraisals that are needed on usual transactions.  This drives prices up.  So if we have mixed signals of a softening marketplace or a leveling, then can that cause a pause in buyers to wait and see?  Probably not because home-buying is an emotional act from the heart which causes people to buy quickly, even at wrong times.  You have the "softening" lingo on one side, and the "demand" principle on the other.  

     A Note on iBuyer firms.  These may seem like a simple solution to softened market selling as you get an instant offer.  One such firm is Opendoor. These firms do charge a fee to the seller.  "iBuyer profits mostly stem from the service fee they charge, which tend to be higher than typical listing agents' commissions."*

*Source:  From the "California Real Estate" magazine, September 2018 issue, page 23, from article, The ERA of iBuyers.

A Critical Inspection Needed in a Home Purchase Transaction

     There are a few inspections that no home sale should be without, except in cases of the most knowledgeable buyers such as property flippers.  But even most of the flippers want to see a pest inspection too.  Right here I will discuss one of the most important inspections a buyer should have. 

What is a Pest Inspection Report?

     "Also called a termite inspection, this visual inspection is conducted by a state-licensed professional hired to look for signs of infestation or damage to a structure by wood-destroying pests.  Pest inspectors look for: Wood-destroying pests, such as termites, carpenter ants, rot fungus and wood-infesting beetles."**

     From Greg: One of the most expensive pest report finds to repair is dry rot. (rot fungus)  Dry rot is a slow creeping thing caused by moisture and if not put in check periodically, can cause a home seller a fortune at selling time.  It is good to get a pest inspection at least every 2-3 years when owning a home.  The danger to one's pocket book is that dry rot is not always visible but can be growing in a home internally and out of site.  It is up to a buyer to request a pest inspection when making an offer, and a good agent will guide them to do so.  Either the buyer or the seller may pay for the inspection.  The buyer then has a contingency period to examine the report and the seller can be required to fix the problems if the offer was written and accepted that way.  Only in rare cases would I ever sell a person a home without having a pest control inspection report provided.  Talk about flying blind.  A pest inspection is worth its weight in gold but only costs about $95 to $125 depending on the firm.

     My goal with this section about inspections is to give buyers and sellers better understanding of the escrow and inspection process.  My next blog entry will discuss another critical inspection.

**Source:  State of California Structural Pest Control Board, Q & A PDF

Greg Nichols
eXp Realty
DRE # 00632894

A Licensed California Real Estate Broker

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