Tips For First Time Buyers on the Monterey Peninsula
Today I’ll be discussing two tips for first time buyers when competing against cash offers in luxury markets such as the Monterey Peninsula. Then I’ll go into some key decisions buyers face, and how to make those decisions work for you.
First I’ll dive into the psychology behind why cash offers have a high perceived value in the eyes of the seller, then I’ll discuss how you can compete against those cash offers in luxury sellers’ markets with low inventory and high demand from buyers to be in those areas.
Cash offers can often times reduce the escrow timeline, meaning that if you have a motivated seller, a buyer presenting a cash offer might not want to do inspections, might not need an appraisal, and certainly would not require a loan contingency. All the cash buyer must do is show proof of funds and take a screenshot of their bank account on their phone in order to show they are immediately qualified for their purchase.
With a cash offer, the seller wouldn’t have to wait for a 45 day escrow with a 21 day loan contingency. I’ve seen cash deals happen in two days on the Monterey Peninsula, it’s crazy! Regardless of the buyer presenting an offer with a loan or cash, the seller will get their money (as long the underwriter approves), but sometimes it’s just a matter of how qualified you look from the beginning that determines who gets the deal in a multiple offer situation. Here are two tips for competing against cash offers, but first a glance at a few houses on the market you might like!
Check Out These Houses For First Time Buyers on the Monterey Peninsula!
Two Quick Tips For First Time Buyers When Competing With Cash Offers
Tip #1 – Get Pre-approved!
As a first time home buyer, let’s say you’ve saved up enough money for a down payment. You’ve found a house you really like, but you haven’t talked to your loan officer. Maybe you don’t have a lender at this point. You call your agent and say, “Hey, I want to make an offer on this beautiful house right now!” Your agent will say, “That’s wonderful! Do you have a pre-approval letter?”
“Well, no I don’t…” This delays the process because it takes some time to get pre-approved – you have to provide tax returns, pay stubs and all sorts of information to give the lender what they need to provide the pre-approval letter. My best advice would be to have this letter done prior to even looking at homes so that you know exactly what you can qualify for, and when you do find the perfect house you don’t have to wait for your letter to analyze your financial situation. So make the offer, and submit it faster than any cash buyer so that you’re the first offer the seller sees.
Tip #2 – Come in Strong on the Offer!
The next step is to come in strong on the offer! It’s very important to present an offer that would be compelling to a seller. In this market, the good properties are selling quickly, so if you’re looking for a deal, maybe wait a few months for some price reductions in hopes of getting a motivated seller for the price you’re looking for. If you found the perfect home and it just came on the market, prepare for a seller to be firm on their negotiating with you until their house has had a chance to be exposed to any interested parties. My recommendation would be to come in strong, and just remember that you’re buying in an area where property values continue to appreciate with the great school districts and a tremendous buyer demand as a retirement location.
Tips For First Time Buyers When Making Key Decisions
Next we’ll examine some key decisions first time buyers must make, and I’ll provide some tips for first time buyers on making those decisions work in your favor.
Buying your first home on the Monterey Peninsula is an exciting time! Maybe you’re tired of renting and you’ve managed to save enough for a down payment! Maybe you opted for renting because you were too busy to manage a property, and now you’re ready to be a homeowner and start renovating to your liking! Whatever the case, buying is fun, but all of these decisions can sure be stressful. Sometimes you just need a little guidance to help move the process along. We’ve found that these five factors are the most important decisions first time buyers must make when considering buying on the Monterey Peninsula, whether you’re looking in Monterey, Carmel, Carmel Valley, Pebble Beach, Pacific Grove, Seaside, or Marina!
Tip #1 – Location, Location, Location!
The bells and whistles of houses are great, but when you get down to brass tax, it would be in your best interests to choose a home in a location that suits the lifestyle you want to lead. Do you want to live 5 minutes from your work, or do you like to be a little more disconnected? Do you want to put your kids through the Carmel School District? Do you like being close to restaurants and wine? Do you want a little bit of land for a garden? Think about what you really need first, and the bells and the aesthetics will follow.
Tip #2 – School District
Speaking of school districts, this deserves its own category! If you don’t have kids, this may not be a big concern yet, but what if you have them in two years? Think about what school district you might want to put your kids through so that you don’t have to move again in a few years when it comes time to make that call. If you do have kids, this might just be #1 on your list above location! We recommend the Carmel Unified and Pacific Grove School Districts as the top districts where we live. The good news is, there are some great properties in Carmel Valley for first time buyers that are located in the Carmel School District, and there’s an emerging market of Pacific Grove homes for small families in the PG School District!
Tip #3 – How Much Down?
Buyers often perceive this as the most stressful and difficult decision of their purchase process. It makes them so stressed, in fact, that often times they decide they better just wait until next year when they can put more money down. Well, money comes and money goes to other necessities and the down payment gets pushed back when ultimately, you probably had enough money in the first place. Best thing to do is talk to a loan consultant about your options. If you put a little bit down, your mortgage will be higher; if you dig deep into those pockets your mortgage will be lower. Maybe you have great income, but your money is tied up in assets, and you don’t have much of a down payment. Maybe you’ve saved a ton over the years for a down, but your salary fluctuates and you would rather make a lower payment. Do what works for you, and find out exactly what you can afford so that when your Realtor takes you around town and shows you houses, you know what to look for and you know what fits your criteria. Your Realtor can give you a recommendation on a great lender.
These decisions are pretty straight forward, but they mean the world when you’re buying your first home on the Monterey Peninsula.
In summary, get your pre-approval letter, come in strong on the offer, make location a top priority, school districts matter, and go with the financing option that puts you in the most comfortable position!
Hope these tips for first time buyers help you in your search!